← David Senra
David Senra
How Brad Jacobs Built 8 Billion-Dollar Companies
02:03:15
Brad Jacobs is the chairman and CEO of QXO, Inc., and the founder of eight separate billion-dollar companies including XPO Logistics, United Rentals and United Waste.
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- [00:03]
Brad Jacobs
I'm ready when you are, man. I'm in the zone. I'm in zone, man.
- [00:06]
David Senra
We're gonna. I hope we start with this. I love your energy. This is what I always tell people when, you know, I did the episode in your book, Right. And since then, thousands, and this is not an exaggeration, thousands of people have sent me messages. But what I try to explain to people, they're like, well, what's like, so different about Brad? I was like, well, first of all, how long do you have? Second of all, he's got the best energy and the most energy of any person I've ever been around. So, like, I really appreciate you taking the time and agreeing to do this. One of my favorite things is your affinity and relationship that you had. You had a bunch of mentors, but one of your most important one that you mentioned, I think four times in the book is Ludwig Jesselson. You have a list of maxims in the very beginning of the book that you learned from other people. The maxim that you listed for him was get the major trend. Right. So if you could just talk about your relationship with him and what he meant to you, I think that's a perfect place to start.
- [00:56]
Brad Jacobs
He meant a lot. So Mr. Jesselson, I never called him Ludwig. Mr. Jesselson. He was significantly older than me and much more accomplished than me. So I showed him respect by calling him Mr. Jesselson. Mr. Jesselson was a special guy. This was someone who was deep, very profound, and had lived life fully and by principles. And he was a religious guy. I wouldn't say he was like ultra religious. He was more taking the, the morality of Judaism, the do's and don'ts and ethical behavior and honesty and so forth. And that became the core of his life. That became the core of his personal life and his business life. Relationships, deep relationships, long term relationships, honest relationships, relationships you can keep coming back to. And sometimes one person has the leverage, sometimes the other person has the leverage. Doesn't matter. You don't take advantage of that. It's long term relationships. And he had, he had about a few dozen deep principles. And one of them is one you just mentioned, which is because he was a trader, ran the largest commodity trading firm in the world, Philip Brothers. It was, you gotta get the long term trend right. You can get a lot of other stuff right.
- [02:05]
David Senra
Yeah.
- [02:06]
Brad Jacobs
But if you don't get the long term trend right, you're kind of in trouble. So you gotta figure that one out. You gotta say, what's going on here? You need context, you need to see what's happening, what did happen, what is happening, and what will likely happen in the future. And what are the different future states that could happen and what's the probabilities for each one of those. And then you have your risk management. So, yeah, the converse of that is if you get the major trend wrong, you can do a thousand things right, you're still going to lose. You're not going to create alpha, you're not going to create value there. So, yeah, that was a big lesson from him.
- [02:41]
David Senra
The other thing that I love is you were 23 years old. You're having lunch with him on a very frequent basis. Like you just said, he's much older. He's one of the most successful people in the world. He's taking an interest in you, and yet you were still comfortable to, like, unload your stresses and your problems. And he would sit there patiently listening. And then I love his response where he's just like, yeah, business is problems. Like, one of the, I think most important lessons is, like, problems. There's a line from Henry Kaiser, who was, you know, in his day was as famous as, like, say, like an Elon is today or you're becoming. And he started 100 different companies. He built the Hoover Dam. He built Liberty ships for the Allies in World War II. And I read a bunch of biographies on him because he was one of Charlie Munger's favorite founders. And he said a line in the biography that's in multiple life stories about him, that problems are just opportunities in workloads. And so I read your recounting in your book of some of your lunches with Mr. Justafen. I was like, oh, he had the exact same. He essentially gave you the same advice.
- [03:37]
Brad Jacobs
Yeah. So in the book, I talked about a specific episode when I was having lunch with him, and I was kind of down and glum. And he said, what's going on? I was talking about this problem and this thing. I was just kind of down. And he said, well, don't stay in the business world if you're going to get down on this stuff. These are the things you should get up from. When you have problems, when you have challenges, you have obstacles by addressing those. That's how you make money. You make money. So the more problems you have, as long as you can solve them, as long as you figure out how to address them and remove the problem, that's how you're creating value. That's a wonderful way to go through life, number one. It's a great way to make Money because you're not always down, because you always have incoming missiles. When you're in the business world, you have problems with employees, with competitors, with regular, I mean just all day long. You have incoming missiles, you have great stuff too. But in between, that is part the of punches in the face. And if you're going to get beaten up by that, you're not going to be successful. And secondly, you're not going to be happy. So you're going to go through life like glum. You see, sometimes you see these like multi billionaire guys and they always look like this. What's the point of all the money? Seriously. So I would not want to be one of these zillionaire guys who's like frowning all the time and upset and angry and depressed. That's much more important to me to be in the right frame of mind and to go through the short time we have in life happy, reasonably happy. I don't have a perfectionist standard. I have to be like in ecstasy and bliss 24 hours a day, seven days a week, but generally happy.
- [05:09]
David Senra
Did you ever meet Sam Zell when he was alive?
- [05:10]
Brad Jacobs
I did, yeah, I'm sure many times.
- [05:12]
David Senra
Okay, so he, great guy. He had the same thing. I was lucky enough to have a two hour, very intense lunch with him. He said the same, very similar thing to you. He's like, I know all the rich guys. He's like, you wouldn't believe how many are miserable. He's like, don't do that. He's like, I wake up every single day. You guys have a lot of similarity where like, I'll spend time with you. You know, the very first time I met you when I went to your book launch party, right. I just remember like, oh, this guy's got crazy energy. And I had already read your book by then. But something that you talk about over and over again in your book is like, problems are just opportunities. It reminded me of. There's this line from in Jeff Bezos's, there's several books on him, but one of his main biographies is a book called the Everything Story Everything Store. And they said that Jeff, you would tell him problems about his business and he would get excited.
- [05:55]
Brad Jacobs
Yeah.
- [05:56]
David Senra
Because he's like, oh. And he talks about the shareholders, like, oh, this is like, these are problems. If I solve these problems, this is going to increase the enterprise value of the company that I'm building. These are actually good things to identify and embrace instead of avoid. One of the most important things that I learned from Brad Jacobs is the importance of Working with the smartest and most talented people you can. Brad says, but most important thing that a CEO does is recruit superlative people. Brad recruits the smartest people he can find and says there's no substitute for smarts. Steve Jobs believed that this was important too. Steve said, I think that I've consistently figured out who the really smart people were to hang around with. You must find extraordinary people. The key observation is that in most things in life, the dynamic range between average quality and the best quality is at most 2 to 1. But in the field that I was interested in, I noticed that the dynamic range between what an average person could accomplish and what the best person could accomplish was 50 or 100 to 1. You need to build a team that pursues the A plus players. That is the end of the Steve Jobs quote. And that is exactly what Ramp has done. Ramp has the most talented technical team in their industry. Becoming an engineer Ramp is nearly impossible. In the last 12 months, they hired only 0.23% of the people that applied. That means when you use Ramp, you now have top tier technical talent and some of the best AI engineers working on your behalf 247 to automate and improve all of your business's financial operations. And they do this on a single platform. That means the longer they use Ramp, the more efficient your company becomes. This is important because as Sam Walton said in his autobiography, you can make a lot of different mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if you're too inefficient. Ramp helps you run an efficient organization. From a customer's perspective. What does a team of a players sound like? It sounds like this customer review that I read which said, Ramp is like having a teammate who you never need to check in on because they have it handled. Go to ramp.com to learn how they can help your business save time and money. Today, that is ramp.com I do have a question on your long term reputation. Okay, so there's this line. Do you remember when Buffett got involved in all that trouble with Solomon Brothers, and he's like, listen, you can lose money, that's fine, but you lose a shred of reputation.
- [08:14]
Brad Jacobs
I'll be ruthless.
- [08:15]
David Senra
I'll be absolutely ruthless. It was a very jarring experience for me at your book launch party because first of all, I was the only one that didn't show up in a suit. So I rectified that today, right? And then everybody else was just like, you know, I've known Brad for three decades. Like, basically everybody there is like, how do you know Brad? It's like, you know, I was an investor of his. You know, he made all this money for this pension fund that we were on and everything else. And like, the stories that I've heard at the party and then since I released the episode is just like, you have a fantastic long term reputation. Do you have any advice on how you were able to maintain that and how important it was for other people to do the same thing?
- [08:50]
Brad Jacobs
Reputation is really important. Your personal brand is extremely important because based on that, people are going to want to do business with you or they're going to want to not do business with you. So every day you're in the office and doing stuff, you're either raising your brand or you're lowering your brand. And that's the main thing you gotta work on. You gotta make sure that your brand reflects integrity and honesty and dependability and stability. And people can count on you. It goes back to Mr. Jesselson. So, Philip Brothers. This is before email. This is before. Actually, it was even before faxes. It was more Twixes and telexes, which took a few days to go through when they went through. So you could do a deal worth hundreds of millions of dollars on a handshake or on a phone call. There's no written confirmation of that for like days. In the meantime, maybe the price of whatever you were trading, oil or copper, had gone up a lot. You still had to have a deal. Otherwise, you know, the whole system doesn't work. So dependability is so, so trust is so, so important to do.
- [09:47]
David Senra
How old were you when you, when he gave you that advice? Did you immediately start applying it? So you, you were optimizing for the long term, even when you were that young?
- [09:54]
Brad Jacobs
Yeah, I think as you get older, you optimize long term more. I think. I think when you're young, you're just so ambitious and you want to get stuff done. You're in the now. As you get older, as you mature, you have more context. I think life in general is about getting more context, seeing things in proportion to other things.
- [10:13]
David Senra
Can you say more about that?
- [10:14]
Brad Jacobs
Well, you know, because we've talked about it a lot outside of your podcast. I'm into meditation. So a lot of the meditation I do is changing, looking at space from different perspectives, not the normal perspective that we have right this minute. So I expand my mind from the earth to the sun, to the solar system, to the galaxy, to clusters of galaxies, to the universe, to the multiverse. Just go way, way, way, way, way high. And then bring it all the way back in. And then go into the molecule and the atom and the proton and the nucleus and right in the middle of all that, and then go to strings, and I find that accordion making my mind like an accordion getting really big and then really, really small. And they're doing the same thing with time, looking at time. Go back towards my life over the last few decades, and then go back centuries and millennia and just keep going way, way, way back, all the way back 13.8 billion years. Go back all the way to the Big Bang and then go all the way forward. And, like, picture the world going forward. That time and space juxtaposition. For me, at least, different things work for different people. Gives me context. It gives me humility, gives me humbleness. It shows that I'm just one thing right here in a major, major thing going on. I'm just one little tiny jet. At the same time, I'm part of that. So I'm very uplifted. I'm very inspired. I'm very motivated. Like, wow. I'm part of, like, a real big deal here. It's great. We all are. We're all part of this huge, huge, huge, huge thing.
- [11:38]
David Senra
So.
- [11:38]
Brad Jacobs
So I think context is really important. It gives you meaning, it gives you purpose, it gives you understanding, it gives you wisdom.
- [11:45]
David Senra
I know you hate when I say this. Cause we've talked about this privately. It's like, you obviously know I study uncommon people for a living, right?
- [11:51]
Brad Jacobs
They do a great job at it.
- [11:52]
David Senra
I appreciate it.
- [11:52]
Brad Jacobs
Maybe unique.
- [11:53]
David Senra
Yeah, I appreciate it. But, like, think about how crazy it is. Like, the people that I study on Founders is. They were so good at their job. Somebody wrote a book about their life. Like, you're talking about very small, but most of their inner monologues. You're different. You have a much more positive energy. And, like, there's almost like a. Let me. Let me give you some context here. We were together a few months ago at a mutual friend's birthday party in Miami. Our friend Rick. And at the. There's a bunch of interesting people at the party. One of them was Apolo Ohno. Okay. Apollo Ohno is the most decorated winter American Winter Olympian of all time. He's become a friend. I met him through the podcast, and he walks up to me, and this is one of the funniest things. And you know. Cause he has people think you're an Olympian. Like, he was training since he was a kid. His dad would make him get up at like 5 in the morning and run drills in the. In the school parking lot. But he still comes from, like, a very positive. He has a great relationship with his dad. Normally it's like, you know, not good when they're put under circumstances. So he was asking me. He's just like, I see this pattern in, you know, when you're reading all these hundreds of biographies about these great entrepreneurs that, like, there is something inside of them driving them. It's actually negative. It could be insecurity. It could be, you know, they grew up in poverty. It could be a bad relationship with their family. And he's like, are they all like that? And I. And you were like 20ft away. You see that guy over there? You go. I go, you know who that is? And he goes, no. I go, that's Brad fucking Jacobs. I was like, I guarantee you he's not driven by that. This is what I mean. You're uncommon amongst uncommon people. Because at least from the outside in the conversation I had, it's like, I think part of this impenetrable nature that you have in, like, oh, yeah, businesses, problems. It's gonna come. What do you think we're doing here? You don't seem to be rattled by them. So what is your inner monologue? Like when you're doing huge fucking deals right now? You're doing all kinds of crazy stuff. You built eight separate billion dollar companies. You don't do that by accident. So how do you make. I'll stop talking there. What is your inner monologue like?
- [13:44]
Brad Jacobs
So it goes back to what Ms. Jesslyn used to say is, problems are your friend. You don't want to just tolerate problems. You want to embrace problems. You want to hug problems. Problems are the way you succeed. You want to run to the fire. You don't want to run away from the fire. Be brave and be courageous. Go into it. I think you can start with anything that's anything. And in this case, in Apollo's case, he starts with. And other people he studied start with negativity. Trauma, stress, insecurity, fear, anxiety. And then that's their motivator. They zero in on that, and then that makes them run faster.
- [14:20]
David Senra
Was that ever your case?
- [14:21]
Brad Jacobs
No, that's not my case.
- [14:23]
David Senra
You're like a unicorn.
- [14:25]
Brad Jacobs
So I don't know that I'm a unicorn. I don't embrace negativity. I'm okay with it, but I don't make a big deal about negativity. I'd much rather enjoy the positivity. I'm a sunny Side up guy.
- [14:36]
David Senra
But your inner monologue, are you nice to yourself? Your ongoing inner monologue?
- [14:41]
Brad Jacobs
I'm reasonably nice. Yeah. I am.
- [14:43]
David Senra
I am vicious. I sound like, you know, David Goggins. Is this like, oh, yeah, I was just.
- [14:48]
Brad Jacobs
Someone was talking Oz.
- [14:50]
David Senra
My inner monologue. My inner monologue sounds like David Goggins, where it's just like, you're not doing enough. This wasn't good enough. Like, I see the problems. So, like, I attack them. Like, it's like, oh, like, I'll listen to like a past podcast or something. Anything I've done, I was like. And all I see are the flaws. I don't see any of the good part.
- [15:07]
Brad Jacobs
So let me comment on that. I think there's two different ways you can approach that. So, yes, as cognitive behavior therapy has taught everyone, we're born with a schema, a prism through which we see life. And that can be clouded by core beliefs of I'm inadequate, I'm weak, I'm defective, I'm unattractive, I'm unlovable. All kinds of negative stuff. Now, there's two ways you can approach on that. You can either dispute those things. First validate, then dispute. So say, well, of course I'm hearing this. I have executives who report to me over the years that have the exact same scheme as you just described, where they're always saying, oh, I'm no good at this. Oh, when people realize how bad I am, I'm just faking it. I'm wearing this mask and I'm doing a bad job. I'm going to get fired. People are hiding stuff against me because they don't respect me. All this, like, negative self talk, it's a complete waste of time. But nevertheless, that's their reality. The reality is they have this steady drone of automatic negative thoughts. There's two ways to deal with that. Either you can dispute them, but first validate it. Don't start with the disputing. First validate and say, okay, yeah, of course I'm having all these negative thoughts because I got a tough job. For example, I have a big job. There's a lot of pressure, and I'm not perfect, so I'm not getting everything right. And so I do mess stuff up and I do get things wrong and all that negative talk. And then you, you catastrophize on those negative things and make them into huge, huge issues when they really should be minimized if you put in proper context. So you first validate it, but then dispute it and say, well, what does the evidence Say here, is this really a rational thought, or is this my schema kicking in to me?
- [16:48]
David Senra
When you say that, it's like, I think you have this gift to step outside of yourself, which now you're saying. But when I say you step out of outside of yourself, you're like, no, I'm in myself.
- [16:58]
Brad Jacobs
I much prefer to be in myself. I like to come to center, okay? I like to find the center. The first time that concept of centering came about was when I was. I went to enrichment camp at a school in the summertime, and there was a book they gave out called On Centering. I don't remember who wrote it, and had a picture of someone making pottery. And they were explaining in the book that it's all about finding the center of the pot you're making. So centering, finding that inner calmness, finding that zone where you're in the groove and everybody has it, everybody has that. You just gotta find it. And that's one of life's missions, is to find that center, find that intercomness zone. And then when I went to college and I studied music under Bill Dixon, same concept came out.
- [17:43]
David Senra
So.
- [17:43]
Brad Jacobs
Oh, I'm familiar. It said, come back to the center. So we're playing improvisation, what he called black music. Some people might call it jazz. He didn't like the word jazz. Playing with some friends. And then you have to find the center, come back to center, back to the center, back to the center. So there'd be a center point in the music. You could go anywhere you wanted in the music. You can improvise all over the place, but come back to center. And then everybody come back to their common center. So I've incorporated this concept of centering, of finding a center into my meditation practices, into my business practices, into my philosophy of life. So I like to find centers. But going back to what we were saying before, so you have this negative self talk coming. You can either take one of two paths. You can take the path of validating and disputing it and seeing it in a proper, rational way, or you can take the approach of just witnessing it, just enjoying it. And it is what it is. It's mindful acceptance of it. So acceptance of that. And I vacillate between those two. Sometimes I do the. You ask how I do it. My internal monologue. If negativity creeps in, of course it creeps in. I'm dancing with the ghosts of my ancestors, just the way you and everybody else is dancing with the ghosts of the ancestors. Evolution works very slowly. Over generations, over long periods of time. So we always have the set of genes that were good for survival and procreation of our ancestors, but not necessarily now. We still have in the gene pool all these, like, irrational thoughts. So another way to look at it is just observe it. Kind of more of a Buddhist way. Just observe it. Like. So one of the ways, the most simplest Buddhist meditation is just observe your breath. Observe your breath. I mean, how easy can that be? All you gotta do is.
- [19:25]
David Senra
We just did this before we started recording. You're like, let's go through a miniature, like, meditation before we begin. Like, I don't ever do that. And I probably start. Should start doing it. I just kind of wake up and go and just try to attack things that I feel like, don't get me wrong. Like, I absolutely. I'm obsessed with what I do. I love, love my work. I'm working on seven days a week. But I wanted to be the best in the world at it. And that's where it's like, oh, you just see these deficiencies.
- [19:49]
Brad Jacobs
So that sounds to me like perfectionism. So I suffered a lot from perfectionism when I was younger. I wanted to be perfect. Not only did I want to be perfect, I wanted everybody else to be perfect. Not only did I want myself and others to be perfect, I wanted the universe to be perfect. Everything just goes swimmingly well at my beck and call and command. Well, it turns out that's not reality.
- [20:09]
David Senra
It's not matrix.
- [20:10]
Brad Jacobs
None of those three constituents are perfect.
- [20:12]
David Senra
There's something that you said in your book. It's actually in this section that I was writing down. You're like, I'm not surprised when things don't go perfectly. That's the nature of the universe. The big problems can be where the best opportunities lie. And so obviously, you know, like, anytime I read something, it's not that I'm reading it. I think about how it relates to every single thing else I've experienced and all the other books I read. And I remember I got to have dinner with Charlie Munger. I spent three hours with him, you know, six months, eight months before he died. There's, like, a trend here, unfortunately, where it's, like, kind of dangerous. Remember, you're like, I don't know. I don't know if I'm gonna have dinner with you. But one of the things I loved it was the top note I left myself. Cause as soon as I left there, I just wrote down what I learned. And it said that Charlie has an almost complete indifference to problems Troubles from time to time should be expected. This is inescapable, so why let it bother you? And it's like, one of the things I most admired about him. He's like, yeah, it's part of life. What's wrong with you? You know, he had 10 decades of life experience. He was way further down the line and obviously way wiser than I was.
- [21:10]
Brad Jacobs
So I have two comments on that. One is, when you go back to the Big Bang, the current construct model of how the universe was created, it was actually created out of imperfection. There was like a slight imbalance between matter and antimatter. Just a slight imbalance. A lot of debate of what caused that. As a result of that, everything came out of that. Had there been perfection at the beginning of the universe, the Big Bang would not have happened. So we are imperfection. We are the children of imperfection. Imperfection is good. Imperfection is not bad. Expecting perfection is. Will cause you stress and strain. It won't. Won't really work.
- [21:46]
David Senra
When you were in your 20s, though, you said, hey, I wanted to be perfect. Not only do I want to be perfect, I want everybody around me to be perfect. I wanted the universe to be perfect. Like, how long did it take for you to learn what you just.
- [21:56]
Brad Jacobs
So when I stepped down from United Rentals, I still stayed as chairman. When I stepped down as CEO of United Rentals and done it for about 10 years. And I want to do my next big thing. I want to do another startup. From the beginning, I was running a big company. I wanted to start it from scratch. And there was a period of a couple years where I was trying to figure out what I was going to do, and I didn't find it. And then the great financial crisis came, and I was kind of lost. I was kind of. It was probably the only time in my life that I was depressed. I'm just not depressed. But that period of time, I was actually clinically depressed. I took the Beck depression Inventory, and I came up, yep, depressed, wow. So. So I found an amazing cognitive therapist. And I went to the guy twice a week, hour and a half a shot for two years. It was fantastic. One of the best things I've ever done in my life. Because what we did was in a. In a. In an environment that was very safe and confidential and trusting with someone who was a professional at, at, at psychology, I was able to first of all identify and then notice more fully my automatic thoughts, the negative thoughts and irrational thoughts, unconstructive thoughts, and then first validate them. Then dispute them first join and then lead to a more constructive way of looking at things. So that cognitive therapy approach of identifying the thoughts and then dealing with them really was the turning point in my life on this perfection thing, because after a few sessions, he said, I kind of know what's going on here. Now I've gotten your measure. You want to hear it? I said, yeah, I want to hear it. And he said, you're suffering from perfectionism. You want everything to be perfect, and it ain't. So we need to get over that. We need to reduce these demands, these musts, these shoulds, these commands that either I or you or the rest of the world is perfect to preferences where I would like me to be better, I would like you to be better. I'd like things to go better, but they don't have to. I can still be happy. And frankly, they're not going to all the time. So I need to accept that. I need to radically accept that I need to be in reality, not put these. You mentioned Bezos. Bezos says a lot of cool stuff. One of the things he says often is, don't fight with reality, because reality always wins. So the reality of this is nothing's perfect. Like, literally nothing is perfect that I found.
- [24:20]
David Senra
Yet he has another line, I think that's related. It's similar to the idea in your book where he's just like, if you don't want to be criticized and you don't want stress, then you don't do anything.
- [24:28]
Brad Jacobs
Exactly.
- [24:28]
David Senra
It's just like, then just sit in a room and watch Netflix and order a doordash or something. But like, you're not going to do anything that you can be proud of.
- [24:34]
Brad Jacobs
So that's another irrational thought. You see, people have. I used to have this a lot, but I don't have it now because I went through that therapy thing and it turned a switch on in my brain. Is a demand that everybody likes me and everybody respects me, and everybody says great stuff about me, and I get good press and I get good reviews, and the stock just goes up every single day. Well, that's not gonna happen. That's called perfectionism. That's not reality. So you just kind of modify that to, well, sure, like everybody else, I'd like to people to say good stuff about me rather than bad stuff about me. But I don't really care if people say bad stuff about me, then, okay, maybe there's some truth in it. Maybe some good thing I can learn from that. Or maybe they're just off and they don't know me, and they're just kind of. They're imposing their distortions on me. But does that really change who I am? It really doesn't. If somebody is saying something bad about me, or does that really matter? It doesn't matter, really, at court. And again, goes back to context in the larger context of things. Most problems really don't matter. They just don't matter. Maybe at the time they seem like one, and maybe we're kicking in, magnifying those problems and making them into big catastrophes and dramas. But most problems really aren't a bad problem, aren't a bad thing.
- [25:48]
David Senra
I always say opportunity is a strange beast. It usually frequently appears after a loss.
- [25:52]
Brad Jacobs
There's always a play. There's always no matter what happens. This goes back to the Justice League conversation. No matter what gets thrown in your face at the moment, it may seem ugly and bad. There's a play. There's a way to utilize that. There's a way to use that. There's a way to embrace that and turn that into success. Anything can be turned into positivity and success, even if it starts in a bad place.
- [26:17]
David Senra
Something came to mind when you were talking. That's also unusual because most of the people that, like, I read biographies about, they go through several different companies, so they find their life's work, but. But normally they were working on something for, like, a very long time. Why do you keep starting so many companies? Like, what is going on?
- [26:34]
Brad Jacobs
That's my thing. Everybody's got their thing, so. Everybody. So you're a great podcaster. You have a talent, your superpowers. You can consume a large amount of information and then distill it down to, like, boom. Here are the most important takeaways from that. It's really brilliant. That's your thing. That's why you're doing it, right? Cause that's what you're good at. You're not playing professional baseball or acting or singing, whatever. You're doing what you're good at. This is what I'm good at. I'm good at figuring out what's the right industry to consolidate. And secondly, I have a toolkit, and it's the same old toolkit. It's not.
- [27:06]
David Senra
You told me this last time. Can you explain this? I love the way you describe this toolkit of how you approach building your businesses.
- [27:11]
Brad Jacobs
So first, I find the right industry. I find something that's large. I find something that's growing. I find something where it's fragmented. I find something where we can Buy things at reasonable prices. I find things where technology could be used. It's not very tech forward industry. I find stuff that AI and automation are not going to disrupt at any time in the near future. So I find industries that have certain characteristics to it. Whether it was garbage, whether it was construction, whether it was transportation or logistics, and now distribution. They all have the same characteristics, same traits. So that's point number one. Point number two is I then put together an amazing team. I put together a team of people who are generally smarter than me and who are more talented than me in what they do. So I have a great chro who knows everything there is to know about HR and compensation and talent recruitment and so forth. I have great M and a team who really know how to do deals and get deals done rather than turn them into dramas. I have great finance, accounting, people who understand everything there is to know agency about running a fast growing company and keeping the books clean. So et cetera. And I get the team together, then I get the compensation sorted out. So I make everybody my partner on the senior team and I give people tons of equity. But there's a catch. It could vest, but you can't sell it for five years and most of it vests in the last two years. So everyone is committed going back to long term relationships. Sure, people come and go for whatever personal reasons or people burn out or whatever. But generally speaking, most of the team stays for a while and you work together as a team. And then I have certain rules of how we're going to interact with each other in a very respectful way, but in a way that encourages looking at things from different angles. So we disagree and we argue. Argue's too strong of a word. We present different ways of looking at a situation that partly overlap and partly conflict. And then we, in a very scientific way figure out, well, let's risk adjust these things, figure out what's right. It's a scientific experiment, an ongoing science experiment, like all day long, of trial and error and experimentation and ab experimenting. And so that culture that we create gives us a power. It gives us a power to attack the industry in a way without all the noise, that a management team has a very coherent team, like a super organism, like a brain, like a very organized group. And then I have, between all those people, we have experience at our main job, which is to buy companies at reasonable prices, where there's a difference between what we can raise capital at and what we can deploy it at. And then we have a skill set to be able to improve the companies that we buy, these are the two main things we're good at, is buying companies in a disciplined way. Price is too high, we don't do it. Price is reasonable, doesn't have to be cheap. We're not trying to steal companies. Price is reasonable, we go for it with gusto. And secondly, the other talent that the team collectively has is we know how to improve the businesses. We know how to improve the pricing, improve the procurement, the HR element, the compensation systems, the technology, the whole tech stack, just everything from A to Z. We're just good at transformation. We're good at taking a company that is making a billion dollars of EBITDA of profit and within three to five years, doubling the profit, doubling the ebitda. That's the main criteria I look at when I look at a company, is purchase price. And secondly, can we double the profit in three to five years? And most of my main acquisitions, I've done that. So Conway, Norbert, Dante, all these different ones, they were great companies. And everyone says, oh, they're working really well. Okay, well, three, three years later, we doubled the profit because we apply the toolkit, we apply the playbook. And it's the same playbook. Industry after industry, the playbook gets refined a little bit here and there, but it's the same playbook.
- [31:06]
David Senra
So when you say, this is just what I do, like, to me, you now have figured out who you are as a person, right? I have this weird theory that I can't prove, but I believe and there's like this myth of the genius young entrepreneur. And I was like, well, I don't know if you study the history of entrepreneurship pretty intensely, you realize that people do most of the time their best work. They many decades into their career. And so there's all kinds of reasons. They're like, oh, they've had more experience, they're wiser, they have more resources, they have more practice. And I don't dispute that that is all true. But I have this weird theory that they also know themselves way better. And I think the key to being a great entrepreneur is building a business that's. I used to say, building a business that's authentic to you. And then I read Michael Dell's excellent autobiography, and he has a better line. He said he built a business that's natural to him. And there's a great story, I want your opinion on this in one second. But there's a great story where, you know, Michael starts in, his company was 19, he's in his 20s, and it's doing Fabulously well. But he realized like, hey, I need some, like grown up, like some, I need some help here. And so he gets this guy, I think his name was Lee Walker, if I remember correctly. And he's about 20 years older than Michael, already started a bunch of companies, rich, you know, didn't have to work anymore. But he saw an unusual once in a generation talent. And Michael decides to help him. He lasts four years. And so I read the book and then as I about to make the podcast on it, I go and see it. I was like, wonder whatever happened to this guy? And I found an interview that he did and he's in his 80s and he's talking about that time. And he gave me some of the best context to really understand this story. And Michael's story is really story of you and everybody and all the people, really very similar people that we're studying. And he's just like, Michael starts his company with $1,000, says, I'm gonna take on IBM for my dorm room. IBM is the most valuable company in the world at the time, which I didn't know it was the first company to hit 100 billion market cap, which is nuts. And he's, you know, just the audacity had that. And he's like. And the first few years, like we're going against this behemoth. And I lasted four years, I started losing my hair, my back hurts, I can't sleep, I'm unhealthy. And he goes, but he goes, But Michael was energized by it. He built a business that was natural to him because like this is what I wanna do. I'm not losing my hair, I'm not depressed, my back's not hurting, I can't sleep, I'm like waking up every day just getting after it. So is that the way you feel about just what you're doing is like this is. It may seem weird cause it is in not a pejorative way, it's not weird in a negative way. I don't know another person that started eight separate billion dollar companies. So it's like almost like you can't help yourself.
- [33:41]
Brad Jacobs
That's what I do. And that's. I know how to do that.
- [33:43]
David Senra
So it's just natural. And this is just like.
- [33:45]
Brad Jacobs
Yeah, I mean I've done it many times before and I've made every mistake in the book over the decades and I've learned from those mistakes and I've refined it and refined it. But I have a winning formula, I know how to execute on this and the team I have knows how to execute on it. I don't want to underestimate the team. So one of the things about being the CEO and the founders, you get all the credit, but, like, there's a lot of people on the team who are doing these things, accomplishing these things.
- [34:08]
David Senra
Yeah. You have a great line in your book, which I see over and over again. You said the CEO's most important job is recruiting superlative people.
- [34:14]
Brad Jacobs
Totally.
- [34:15]
David Senra
It's like, you're. You're people. So my question to you, though, is like, what would it take to get you to stop?
- [34:22]
Brad Jacobs
Yeah. I don't know, because I'm not. I'm not. And I don't see that in my near future. I just started the company in the last few months.
- [34:29]
David Senra
This is what I. No, but in general, like, so this is what I loved about, you know, most of the people I admire. It's like, I can still remember this. You know, I put it into the Maximus. It's like, if you love what you do, your extra strategy is death. Right? Like, you should be working on something. So, like, you know, Sam Zell told me, he's like, I'm doing deals till I died. Well, he was doing deals till he died. Munger, same thing. Like, I met him right after the Silicon Valley bank collapse. It was like he was like a kid in a candy shop. He just thought this was, like, the. He didn't want people to be hurt, obviously, but he's just like, you know how many financial panics that I've seen in my lifetime? Like, of course. This is, like, nothing new. So I remember I was actually having dinner. I remember where it was. I was at Harry's Pizzeria in Miami in the Design District. And, you know, I was supposed to be paying attention to my wife. And on our date, and I was thinking about the podcast and all the shit I'm reading, and I go and, like, take a bite into a piece of pizza. And I was like, people used to say, if you love what you do, you do it for free. And I go, no, there's a different level. If you love what you do, they couldn't pay you to stop.
- [35:31]
Brad Jacobs
There you go.
- [35:32]
David Senra
And I was like, how much money could you have gone to Steve Jobs? Like, hey, how much would it take for you to not work on Apple? That's not why he's doing it.
- [35:39]
Brad Jacobs
It's that.
- [35:40]
David Senra
That's not why they're doing it in Enzo Ferrari, Estee Lauder, Edwin Land, Coco Chanel, all these other people, like, they Just can't. Michael Ferrero I just. The Michelin brothers like this story over and over again. I get the same sense to you. It's just like if I said, hey, what price I'm going to pay you and you can't do any work, you have to stay home, you can't. It's just like there's no price.
- [36:01]
Brad Jacobs
Everyone. You just named all the successful people, they were all in. They were 100% in. They weren't like partly in and partly aren't. They're in, they're in. 100% in and completely focused and single mindedly concentrated on, on executing the plan. And that's important. And I want, you want to have people on your team who share that passion, that commitment.
- [36:21]
David Senra
The best leaders in business are able to spot patterns, but you can't spot patterns if you can't see your data. And most businesses are only using 20% of their data because 80% of your customer intelligence is invisible, hidden in emails, transcripts and conversations. Unless you have HubSpot. HubSpot is where all of your data comes together so you can see the patterns that matter. Because when you know more, you grow more. And that is a pattern that never fails. Visit HubSpot.com today. That is HubSpot.com that leads me to another great one of your. I don't even think you think it's a maximum, but it's how you differentiate between A, B and C players where you're like, I'm just gonna summarize this and jump in whenever you want. But you envision you do another thought experiment of okay, do you want to see if you have the absolute best people on your team? Just visualize that they're coming into your office and they're saying, brad, I quit. So then what happens next in this scenario?
- [37:17]
Brad Jacobs
So I'm always interacting with my chro and going over talent and making sure everybody's happy and motivated.
- [37:24]
David Senra
How much percentage of your like?
- [37:26]
Brad Jacobs
A lot. I spend most of my time on people and talent issues.
- [37:30]
David Senra
So most of your time?
- [37:32]
Brad Jacobs
No, no, not the most, but the most. If I did a pie chart of like how I divide up my time, the largest percent is on people issues.
- [37:39]
David Senra
There's a funny story about this and then I don't want to interrupt, but I do. This is inside of me and I just has to come out all these stories because I find them fascinating. So there's two MBA students in Stanford in the 90s, in late 90s. And in 97 they interviewed 16 technology company founders. Since they're in Silicon Valley at the time. And they published this book called in the Company of Giants. And everybody's in there, Bill Gates and Steve Jobs and everybody else. And they're telling Steve, they're like, well, you're the founder, of course, you don't have time to recruit people. And Steve's like, what? No, it sounds exactly what you said in your book. It's the most important. He goes, and he did a great way to demonstrate the point. He goes, let's say you're starting a company, you're in Silicon Valley, likes what you're doing over here. You pick your co founder. You should think long and hard about that. Your co founder is 50% of the company at that point. And then he goes, and then he goes, but you still goes out. Now you have to pick the 10th person. That person's 10% of your company. And you're saying you don't have time. Like, what else are you doing?
- [38:37]
Brad Jacobs
It's all about the people. It's all about the people. You know, systems and tech and budgets and customers and sales. All these things are really, really important. But you can't achieve excellence in those things without fantastic people, without fantastic leaders. And I spend a lot of time, especially on the top few dozen people. I want to make sure everybody's in it to win it. Everybody is fully, fully engaged. And I do a mental exercise where I picture the person coming into my office and saying, brad, I quit. Like, this is not a conversation about you making me a counteroffer. I'm done, I've already moved and so forth. This is about a conversation about how do we make an orderly transition because I respect you and I don't want to leave behind dry. And then I try to feel and visualize what would be my reaction if that person came into me and quit. If my reaction to that is yes, I don't want to smile, I don't want to act like I'm happy about this, but you know, I didn't have. Nobody likes firing people. And I just didn't, you know, I just kept postponing firing that person. I shouldn't have, but I did. And this is great. I don't have to pay severance and you know, that solves that problem. No problem at all. We'll replace them. That's a C player. That's someone really, you should get the courage up to take, to get off the, manage, get off the team right away. And then on the second category, if my reaction to it is, you know, it kind of sucks, you know, it's what I would have preferred. That person stayed. But it's not the end of the world. We'll hire a headhunter. We'll get someone as good, maybe something better, and, you know, things will work out. That's a B player. But if. When I visualize that person quitting, my reaction to that is pure terror and absolute panic. And like, somebody took a baseball bat and just whacked me in the stomach and then punched me in the face. I'm going, oh, my God. Like, I'm never going to find someone as good as her. No way. Or I'm never going to have someone as talented as that person. I'm never going to have someone who brings to the table their particular superpower. I am. And I can't even hear what they're saying anymore because I'm just, like, having this internal panic dialogue going on. That's what you call an A player. So I want all A players around me. I want people whose relationship with me I value so much that if it was terminated, I would be lost. And I want them to feel the same way. I want to have mutual relationships. I want people who love being in a relationship with the team, with the company, and that we all are in it together to go conquer the world. I think I had neighbors. It's been two years, years since I wrote the book, but I think I had a chapter that said how to kill the competition instead of killing each other. And that's, you know, it's kind of funny, but it's a serious title, is you don't want to have a dysfunctional management team. One of the most important things that has allowed us to create tens and tens of billions of dollars of value is the management team's coherent. We have the right people on the management team, and we have the rules of the road of how we're going to deal with each other in a respectful way. And that still encourages differences of opinion.
- [41:39]
David Senra
First of all, I love the way you described because everybody says, oh, yeah, hire A players. It's really hard to differentiate. Like, what does that actually mean? And I think this thought experiment is perfect. It's like, we are fucked if this person leaves. That's an A player. That's a way to think about this. But this also goes down to your gift and why I think I've learned so much from you. One, partially your ability to have very clear thinking and then put it in a memorable way. So you were just talking about, like, the relationships that you have with the people you work for. You have a line in the book where, like he says, an organization is like a party. You only want to invite people who bring the vibe up. My team and I spend a lot of time together, so it's a big deal that we like one another.
- [42:18]
Brad Jacobs
Yeah, I agree with that. Who said that? That was a good one.
- [42:23]
David Senra
Bezos has a line, and I think his shareholder is just, like, life is too short to work with people you don't admire. Like, it's same situation. It's like you're in charge. You get to choose. Again, this goes back to the gift of being the CEO, of being an entrepreneur. It's like, it's very rare that you get to literally choose who has access to who's around you. And I love this idea. It's like, hey, the organization is just like a party. You want people to. You only want people to bring them to.
- [42:43]
Brad Jacobs
David. It's all about the people. It's all about the people. Because the people then create all the. All the different processes and work streams and transformations and everything.
- [42:54]
David Senra
This is very fascinating because, like, it's obviously, you know, business is people, right? You're not only just like the people that are building the product, but like, all businesses. The best definition of business I've ever heard actually came from Richard Branson. He says all businesses is an idea that makes somebody else's life better. Right? And that's why there's always more opportunity. Cause there's infinite ways we think technology is gonna, like, it changes things, but then it just usually opens up other ways to make other people's lives better. So just focus on, like, if you're looking for an opportunity, how can I just serve other people? Another line that's very related to this is Henry Ford where he says, money comes naturally as a result of service. Like, I think those two ideas go together. The reason I was thinking about this, though, the best way I just. I've heard describe what you were just saying, it's all about people. Work with the best people you possibly can. The A players we're going to talk about, you have this great line about there's no substitute for brains. But before that, it's like the way that I've heard this described best, in my opinion, is from Ed Catmull, the founder of Pixar, right? He would go around and give all these talks and he was actually, like, shocked that he would ask the audience, like, what's more important? People are ideas. He says every single time people got it wrong, they said it was the ideas. And he's like, no, it's the people. And so he has this great line where he's like, listen, if you give a mediocre idea, right, to a brilliant team, they're either going to fix it or they'll throw it out and come up with something better, something new. But if you give a great idea to a mediocre team, they're going to screw it up. So it's obviously because ideas come from people. So it's the people.
- [44:20]
Brad Jacobs
That's exactly what I'm trying to say.
- [44:22]
David Senra
What he said, he says it in like just a great way. But you have a very explicit piece of advice in your book that I think is interesting where you're like, screening for. There's no substitute for brains. Screening for Superior intelligence eliminates 90% of all candidates. So it's the first thing I look at. There's no substitute for smarts. The CEO trait most closely correlated with organizational success is a high iq double down on hiring the brightest.
- [44:45]
Brad Jacobs
Yeah, well, you want smart people, and I particularly want people who are smarter than me. I want people who are. Who uplift me, who teach me. I don't want to be.
- [44:54]
David Senra
Do you want them specialized? Because you mentioned earlier, you said you want them smarter than you, but also better at their particular.
- [45:00]
Brad Jacobs
The vast majority of them are specialized.
- [45:02]
David Senra
Okay?
- [45:02]
Brad Jacobs
They're a finance person, they're an investor person, they're a strategic person. They have something that they tech person, they bring to the table that they're really an inch wide, a mile deep in. But you also want them to have certain human qualities that transcend what their specialty is. And those are as or more important than the technical skills.
- [45:23]
David Senra
Explain.
- [45:24]
Brad Jacobs
Well, you want, you mentioned smart. You want people who are honest. You want people who are hard working, you want people who are collegial, you want people who are really in it, like on the work life balance thing. And boom, it's work. And their life is a lot. Their work. And they enjoy that. I don't have to hold them like a school teacher, a stick over their head, getting them to work late or come in early, work on weekends. They want to do that. They enjoy doing that. Their job, their career, their success, the collective success of the company is an important part of Viggerstaalt. It's really an important part of their being and their purpose.
- [45:54]
David Senra
Was there ever a time. I don't mean it could be interrupted, but this is fascinating and it's almost selfish to have this conversation. Cause like, I get to ask you questions and learn from you. Was there ever a Time where work wasn't where you were more balanced. When was the last time you were balanced? So when you started your first company at 23.
- [46:11]
Brad Jacobs
I did. And I've been completely imbalanced since. I've been working seven days a week.
- [46:14]
David Senra
Yeah, because you Very few vacations. You guys scaled like four years to, I don't know, like a couple billion doll. It was just like an insane story for me.
- [46:19]
Brad Jacobs
It's not work for me. It's like I'm really enjoying it. To me, it's a craft. It's a skill that I have. Were you enjoy doing it?
- [46:25]
David Senra
Were you always honest with yourself that it was the top priority?
- [46:29]
Brad Jacobs
I think so, yeah.
- [46:30]
David Senra
I had a conversation with a friend of mine on the drive over here, and I think I'm lying to myself. So let me give you example. So, you know, in many cases, like, you read these biographies of these people, and it winds up being a cautionary tale, you know? Cause they kind of like will sacrifice everything for professional success. Their health, their relationships, everything else.
- [46:50]
Brad Jacobs
Well, that I'm not in favor of.
- [46:51]
David Senra
No, no, no. You're still married. You're a good father. Like everything else. Yeah, for sure. But your main. It's not like you have an abundance of hobbies outside of work, from what I understand.
- [47:00]
Brad Jacobs
But meditation and music, that's pretty much it.
- [47:02]
David Senra
There you go. So for a long time, every single person I read about, I was like, okay, well, I even titled the episode My Personal Blueprint, which was Ed Thorpe. Right, Ed Thorpe. I'll give a short rundown real quick. First person to invent a quantitative hedge fund. He invented the ability to count cards for blackjack. Writes this book in the 1960s called Beat. A dealer made more money than he'll ever spend. But if you read his book, you get to the end, it's like he was much more balanced. He also came from academia, and maybe this had played a role into that. But essentially he lived the life of venture because he truly loved what he did. Once he made more money than he could spend, he stopped trading, more time for money, Had a good marriage till his wife passed away from cancer, took care of his health. But like much more of like a. Let's say there's five important things. And he kind of like divvied up. Maybe work was 50%, but the other four are other 50%. And I was like, oh, that's kind of my personal blueprint. And I said, on the driver, I go, no, I'm lying. It's like 90% of what I think about and how I spend my time is just work.
- [48:11]
Brad Jacobs
That's a beautiful thing. So all the people you've mentioned so far, all these very, very successful people, I guarantee you, probably every single one of them, with few exceptions, if any, were all in. And what they were doing was their passion, and they were just so excited about it. They were in the flow. They were in the flow of being so absorbed on something that you'd lose track of time and the whole rest of the universe is gone. You just in it. You're just really into something that you do well, and you're with people that you really like, and you're likely to be successful because you're doing what you do.
- [48:43]
David Senra
When I was thinking about the amount of research that you do that you explain before you get into an industry, before you start a company, it's like the way I describe your book is buy it, read it all the way through. And then what I really think it is, you put it close to your desk because it's a reference manual. Because you can just pick this up now and read one chapter that takes 10 minutes and get good ideas out of it.
- [49:05]
Brad Jacobs
Do you know I'm writing a sequel?
- [49:06]
David Senra
Last time you told me, it's like, I only had one book in me. I have nothing else.
- [49:09]
Brad Jacobs
So I wrote the book, and I got so much feedback of what people thought about it, and people asked, well, you should really talk more about this and this, this. At first I said, I'm never writing another book.
- [49:18]
David Senra
Yes, I will.
- [49:18]
Brad Jacobs
It takes a lot of time to write a book, and I don't have a lot of time. But I had so many people ask me similar questions. Okay, I'm going to write a sequel that addresses those particular questions. You know what the title's going to be? That was how to Make a Few Billion Dollars. This one's going to be called how to Make a Few More Billion Dollars. That great award. Yes.
- [49:35]
David Senra
Let me get an early copy, please. You were very nice to send me an early copy of this one. But I think what ties all this together, when I think about your research process, the way you go after life, all the people we've been talking about, from Steve Jobs to Jeff Bezos. This is like, mediocrity is always invisible until passion shows up and exposes it.
- [49:50]
Brad Jacobs
Love it.
- [49:50]
David Senra
I think that is what animates me. It's just like, you see this. You're talking about, like, even when you buy great companies, good companies. So, like, what else could you do? It's like, there's always more because you could always infuse passion into what you're doing. Obsession, work with the best people. Of course, you can keep getting better and better results.
- [50:07]
Brad Jacobs
Yeah, well, I agree with that. I think. So what you just said, you buy a company, it's doing very well, and then three, four years later, you've doubled the profit. What did you do? You went in with a toolkit, and you went into the attack the pricing using algorithms and elasticity analysis. You've tacked the compensation so you've got the salespeople made partners rather than pupils to the parent authoritarian figure at corporate. You put in technology that frees up time, that allows people to spend time doing, selling and doing their job rather than trying to find information. You're sharing information in very good ways. So you apply a certain toolkit, Boom, you double profit.
- [50:46]
David Senra
So wait a minute. This brings up something interesting, and I've been talking about lately, the different archetypes there is in founders and CEOs, right? Everybody thinks like, oh, there's kind of one archetype, and especially the ones that are popularized now, it's like, essentially like the Steve Jobs dictator make, you know, almost all the decisions.
- [50:59]
Brad Jacobs
I don't like that.
- [51:00]
David Senra
Yeah, so exactly. I just heard the pupil part.
- [51:02]
Brad Jacobs
So who am I to criticize Steve Jobs? No, no, no.
- [51:05]
David Senra
It's not a criticize criticism. It's just like. That's the beauty of entrepreneurship, is, like, you get to do it.
- [51:10]
Brad Jacobs
I wouldn't be able to do that.
- [51:10]
David Senra
So what is your archetype? What is like. Let me back up before I ask you a question, because I've been having long conversations with Daniel Ek, the founder of Spotify, who's become a good friend, and that's his whole thing where we actually might be writing something together about. He's concerned that there's gonna be young entrepreneurs out there that are like, I'm not like Elon, or I'm not like Steve, or I'm not like all these people, so therefore, I can't be an entrepreneur. He's like, there's multiple archetypes. He's like, I'm not like that. He says he thinks he's a better coach than he is a player. And essentially, he has discovered. It's almost like this. He recruits some of the best talent in the world to the point where he's like, I used to be the best at product. That guy's better at product. He should do it. That guy's a better designer. That person's a better hr. That person's everything. So he's like the way I look at it is like much more of a coach than a player. What is your archetype?
- [51:58]
Brad Jacobs
So you want to get the right people in place, you want to get the compensation aligned, and then you want to be communicating with each other in a very constructive way, in a very prolific way. So Friday we had our second mor monthly operating review for this company. We had bought Beacon. And how did we come up with the agenda? It was ten hour meeting, two breaks. One was ten minutes, one was five minutes. Nobody was distracted, nobody was on phones or devices. Those are all shut off. We were very concentrating on the one person that had the proverbial microphone at a time and listening very carefully and intently what that person was saying and then debating each point and each action point. How did we come up with the agenda? Here's how did I, the CEO, come from above and say, here's the agenda that I think is the important thing. I'm smarter than all of you and here's what we should be doing. No how pompous and arrogant and kind of ineffective really to do that. What I do is just the opposite. I send around a question pro, an app, and we say, here's all the materials pre read for the meeting. We don't do PowerPoints and go through all that nonsense where everyone tells each other how great they're doing. It's just a silliness that you see a lot in corporate America. We send all those decks out ahead of time, we have everybody read them, and then we have everybody fill out the app. Say, based on everything I read, here are my main takeaways and here are the main questions that I think are so important in terms of creating value that we should, the whole team, all 25 of us who were in that meeting, spend time debating and discussing around the table in the limited time we've got. Because 10 hours goes by like that. And then I send back out the takeaways and I send back out the questions. People rank them on a scale of 1 to 10. Again, we have an app for this. Then I send people the takeaways. Here's how they were rated, here's what people thought were the most important takeaways, very valuable. Now you've got the benefit of everybody's perspectives on the same data. So people have seen the same charts, the same data, the same metrics and KPIs, but they've seen it from a little different angle. It's very enlightening. And then I've got the questions. I tell everybody, rate the question 1 to 10 and then all the questions that are rated 8, 9 and 10, between 8 and 10. That's the agenda, David. That's what we talked about. So we just went. Then we put them in categories. Everything about tech that was rated 8 or above, here they are. Everything that was on comp or people, everything that was on strategic, everything was on M and A. All the different categories, only the ones that the group voted on, at least innate. Now what is the consequence of that? Number one, we have an amazing meeting. It's a good agenda, much better than I could come up with because now it's got everybody's angle on it, it's group sourced. Secondly, everybody's involved in it because the boss didn't come down and like, here's the agenda. It's like we collectively made the agenda so people realize the truth of the matter is we really respect each other's opinions. There's no one person who's the authoritarian figure, who's like teaching everybody else. It's a group. I've created a group. I've created a superorganism. I've created like a beehive or an ant colony or a brain or a human body, superorganisms. Things that are a collection of people, that the sum is greater than the collection of the parts and the whole is greater than each individual. We have a holistic, powerful approach to that. That's, that's how I run the business.
- [55:18]
David Senra
How many people would be in a meeting like that?
- [55:20]
Brad Jacobs
So I've experimented with this over the years. I used to have larger meetings with 40 or 50 people and it just didn't work. And so those meetings, those monthly operating reviews, which are the most important meeting of the month, okay, so then the most senior people in the company come together and do the exercise I just mentioned for 10 hours with almost no breaks, almost no breaks at all. That I have 25 people and I limit it to 25. I don't want more than 25. I don't know what's so magic about 25, but 20 to 25 is the ideal group. You have enough people that you get diversity of opinion and you have dialectical discussions, meaning looking at issues from multiple perspectives, then analyzing those and synthesizing them and finding the truth. But you don't have so many people that you're, you know, people are peacocking and trying to impress each other and don't want to be vulnerable. You want people to be vulnerable. You want people to be, to trust the other people in the room. So much that you've created a safe zone to say, you know what? I've been thinking this and thinking this, but the more I'm listening to you, the more I'm hearing about this. I may be wrong. Maybe I got this thing completely upside down. I'm starting to come around to looking at it like this with one little twist. Now I think what we should do is xyz and then what do you all think of that? That's a fantastic conversation. When you have leaders of the company feeling it's safe to show that, hey, I was wrong, I was thinking things wrong and I modeled that. I role model that myself all the time. Be flexible in thinking, don't be rigid in thinking, don't be black and white dichotomous thinking. But be open minded, be receptive to be willing to learn, to be challenged. And that's okay to be proven wrong. It's actually a good thing we're learning together.
- [56:52]
David Senra
Two questions on that. How? What percent of the meeting are you speaking in a situation like that?
- [56:57]
Brad Jacobs
So I open up usually and I ramble on for like an hour, maybe even more than an hour of the state of the Union from my perspective. And I try not to just mention things that I form conclusions on, but I try to frame things of these are the most important successes of the company. But these are the things where we need to improve. And here are the issues that in my view, after reading everybody's votes and everything I think are the things we should attention direct. We should spend most amount of time solving because I think those will create the most amount of value. And I try to keep it balanced. The good stuff and the bad stuff. Yes, I do. Atta boys and atta girls and rah rahs. That's a good thing to do for leadership. But I in equal measure do. Look, we gotta keep it real. We gotta keep it honest. Here's things that we said by this deadline, we're gonna do it. We're a couple weeks behind on this. Let's get going here. What's going on? Here's we thought this outcome was gonna happen and we're only 92% there. How can we get to 100%? So I try to start off with a balance, but then I try to shut up and then I try to let the mechanical going through the questions where I just go down the questions by categories and then go around the room and hear everyone's opinion. And you don't want the leader talking a huge amount of time.
- [58:07]
David Senra
Yeah. So you basically start with an Hour. The next. In this case, nine hours. The nine hours for this. A meeting.
- [58:14]
Brad Jacobs
Everyone else.
- [58:15]
David Senra
Everyone else.
- [58:15]
Brad Jacobs
And I'll talk to, but not inordinately. I've already used up my hour, for God's sake.
- [58:19]
David Senra
Yeah. This is one of the things that I felt, and I've seen this with a lot, with, like, really remarkable people, is how many people. Like, when we had this intense breakfast at your house a few months ago, you had a notepad, and you were. I'm talking, and you're taking notes. Like, what the hell is going. It's the reverse. No, but it should be the reverse. In fact, I have a story about this, and then I want another question for you. Was Mitch Rales, obviously one of the founders of Danaher great company? Oh, incredible. And Danaher way.
- [58:47]
Brad Jacobs
He's.
- [58:47]
David Senra
Yeah, he's actually a mentor of two close friends of mine. So I get, like, insights from them about him and just what one of the most remarkable things that he did. But he was at this Vertical market software conference. Was only, like, 40 people there recently. And a friend of mine, I was going for a walk in New York City about this, and he's just like, I don't understand. The guy sat in the front row. He's the most successful person there by far. And he was just taking notes the whole time. I was like, that is why he's successful. It's not the reverse. It's not that you go and you build a $200 billion company, whatever it is, and then take notes. He was like that his whole time, just relentless. Like you have valuable information. Great. I just did this episode in Jimmy Iovine. He's a very fascinating person, and he's this great line. He said, great can come from anywhere. And then you have this other thing. I'll get back to the question. Great can come from anywhere. He's in the music business. His point was that he was trying to help. He was partners and a mentor of Dr. Dre, who's one of the greatest hip hop producers of all time. Dre didn't have an artist to work with. They wound up getting this demo tape from Eminem, and. And at the time, he's this poor kid in Michigan living in a trailer park. Right? No. Like, no resources at all. And yet they're like, we weren't looking for somebody to be controversial. We were looking for great. And guess what? It can come from anywhere. It came from this kid that was obsessed sitting in a fricking trailer park saying, I want to do this thing, and I'm Going to do this to the best of my ability. I want to talk about. I'm going to go back to this question I have, but you have. I love this idea of grabbing information, which is really fascinating. There's multiple examples in your book. And then I find these in other books where it's just like you. It's so nuts that especially when companies get big and older, they don't. They stop asking information from. From people from the front line. So you're like, often when we buy a company, we discover that the frontline employees, middle managers, and even some senior executives have never been asked, what would you. What would you do to improve the company? You would think owners would want to know that. And then you have this great thing that I think is actually good for business, but also personal relationships. You ask, what is the stupidest thing we're doing and what is the smartest thing we're doing? This ability to. Like, you just almost described it in these, in these meetings, like, hey, we're going to disperse and ask these questions and see what comes back. And then we'll rank the information.
- [60:56]
Brad Jacobs
So the end of those operating reviews. Once we've gone through all the lists. Now we do human interactions. That's where the fun starts. So we worked really hard solving all these problems and debating all these issues. Now we put that aside and I ask a series of questions. I modify them a little bit every month, but I have a list of a few dozen questions. I pick which ones I want to ask each time. Usually, one of the first ones is, what is something somebody said today that you have a different opinion on? What is something that somebody said you disagree with and you didn't get a chance to talk about it? I just go around one by one to each person. That's a wonderful thing. Many management teams can't do that because everyone would get upset here. It's like, great. And then we have a nice. I ask everyone, what's your single biggest takeaway from today? What is something that 10 hours ago you didn't understand about how we're going to make money and how we're going to serve customers better and how we're going to improve employee engagement and how we're going to kill the competition? What is something you didn't know? What is something you learned? And just go around one by one by one by one. And then I ask them, when I think about people, not in this room, but people in the organization out there in the field, who's an mvp, who's the most valuable player who's somebody who's going above and beyond, that you really respect, you really admire, you really think is amazing. Wish we had thousand more like that person. And why. Why are they. And I sent an email to them afterwards saying, hey, I was in a meeting with the leaders of the company and you were nominated as an MVP because XYZ people love it. Sometimes they start crying. There's a lot of times it's really, really emotional thing. It's really, really nice thing. Validating the field. And then I bring it inwards and I say, who around this table today, in your mind, did their star go up? The star already might have been high because everyone loves each other, but even higher. And why. What is something that somebody said today in the meeting that impressed you, that made you go, aha? Or made you say, damn? That's a good insight. That's a good perception. I really like that. Who was it and what did they say? We go around everything like that. And I have a few other questions like that. And then I bring it down to the person themselves and I say, finish the sentence. I resolve to improve the company by. Just one by one. And each person stands up and says, I resolve to improve the company by. And then they say what they want to say. It's a great thing. What I didn't get a chance to do Friday because we ran out of time. What I often do is then we go into another room, we get out of the boardroom, get out of the conference room, and then we stand in a circle and just silently look at each other with for the first couple minutes. A couple minutes is a long time to be like looking around everybody else. A lot of people that's uncomfortable. It's not uncomfortable if you all like each other and look at each person and say, I admire this person. Because what are the strengths? What are the qualities? What are the traits? What are the skills? What are the things that they do that you really are impressed with? You really like that person a lot. And just go one by one, look at each person and. And just identify that. And then after a minute or two's gone by, I say, okay, now let's do the same thing. Look at each person and say, I really. So we've already said why I'm grateful they're on the team. So now I want to say, so it was gratitude. Gratitude's a wonderful leadership technique. And then the second thing is, I really wish that person great success in the company. And I can picture this company five years from now accomplishing XYZ And I send nice vibes, I send love vibes to that person. Just go around one by one, all silently, nothing out loud, just one by one by one by one. And you start seeing people smile. Like always. I've done it so many times. You start seeing people smile, you start looking at people, you see, looking at people in a very positive, uplifting way and appreciative way. And then I say, okay, now we've concluded the day and I declare the day a success and congratulations. Then we just clap and we clap. Sometimes this clapping goes on for like five minutes. That's like really, really. It's a very. Then people levitate home, go to the airport and go home.
- [64:49]
David Senra
How much of the way you run your company is like guided by intuition? Like, you seem like a very intuitive person to me.
- [64:55]
Brad Jacobs
Maybe not as much as you think. No, not. Yes. There's always instinct, there's always intuition. You're always going by your gut.
- [65:02]
David Senra
But like, how would you even know? Like, this is an unusual, like what you just described. Like, how did you learn that?
- [65:08]
Brad Jacobs
So I've experimented over time, okay, I've experimented with different things. I've read a lot. I've studied positive psychology, I've studied cognitive therapy, I've studied a lot of stuff. I read a lot of stuff. I meditate a lot. I do things that work for me. So I think of things that have worked for me on my path, my evolution of feeling gratitude and all the happiness that comes with feeling gratitude by feeling appreciation by problem solving, all the different things. And I try to imbibe that to other people. And then if it works, so, feedback loops. One of the key tenets of all my companies is we have intense, voluminous feedback loops. Feedback loops between the senior team, feedback loops between the senior team and mid level management, feedback loops between senior medium and frontline management. Feedback loops with customers, feedback loops with vendors, feedback loops with investors. All the part, all the constituents of the constellation that make a corporation, that make a company. We have to be communicating, we have to be communicating very intensely with each other in an honest way and then sharing that information. I share information much more widely in my organisms, in my organizations than most companies. Most companies, they, they, they're afraid to share it. They're afraid to share, they're afraid to share the good information. They think a competitor is going to hear about it. Okay, well, they will, but let them try to copy us. They don't have all the ingredients to do that. Or they say, we don't want to share the bad stuff because then the market's going to hear our weaknesses. Okay, well that's kind of true too. That's so much overshadowed by the benefit of we're learning where we have to improve, we're learning how to become better.
- [66:51]
David Senra
I read something Jeff Bezos said that changed my perspective on the importance of high quality sleep. He said that he makes sure he gets eight hours of sleep a night and as a result his mood, his energy and his decision making is improved. His point was that you get paid to make high quality decisions and you can't do that if you're sleeping terribly. And the product that has made the biggest impact on my quality of sleep for years is eight Sleep. I'm lucky enough to be friends with the founder of eight Sleep, Mateo and we live in the same city. A few months after I started using 8 sleep, I randomly ran into Mateo at a restaurant and I was with some friends. So I go over and say hi. When I got back to my table, my friend asked me who was I talking to and I said, that's Mateo, the founder of eight Sleep. And my friend replied, he looks like he gets good sleep. Mateo is living and breathing his product. I had never had the ability to change the temperature of my bed before I had an eight Sleep. I had no idea how much that would improve the quality of my sleep. I keep my eight Sleep ice cold. It's cold before I get into bed so I fall asleep faster and wake up less during the night. That feature alone is worth 10 times the price. There are very few no brainer investments in life and I believe eight Sleep is one of them. That is why elite founders like Mark Zuckerberg and Elon Musk have all said publicly that they use eight sleep. I would recommend getting the Pod 5, which is the newest generation of their signature product. It is a smart mattress cover that you place on top of your existing mattress and it is next level sleep tech. It automatically regulates your body temperature throughout the night independently for each side of the bed. The result is you get up to a full hour of additional quality sleep per night. Make the no brainer investment in your sleep by going to 8sleep.com senra and use the code senra to get $350 off. You can try it for 30 days at home and return it if you don't like it, but I'm confident you will love it. I will never let anyone take my eight sleep from me. Make sure you get yours@eightsleep.com Senra so this is what you were describing earlier this, like almost a constant iterative trial and error process.
- [68:51]
Brad Jacobs
Absolutely.
- [68:51]
David Senra
And just keeping the information flowing through the company. There's an idea that I think, when I thought of your ideas, like, hey, we're going to buy the company. We're going to ask, like, what would you do if you were running the company? What's the stupidest thing we're doing? What's the smartest thing we're doing? I, as, you know, like, very. I'm not interested. I'm interested in timeless principles. Not timely. Right. And when I read that in your book, what I thought of was not you building your company. I thought of Jim Casey building UPS a hundred years ago and what he learned. Because a lot of these things, that these ideas have survived for a long period of time. They're not dependent on the company. They really depend on human nature. Because, like, history doesn't repeat. Human nature does. Right. Human nature is kind of constant. Doesn't really change. And so what Jim realized is the more successful he became, the more successful his company became. His executives, their incentives were to hide the bad news and just tell them good things because then it's like, everything's great in the company, Jim. And so, like, and I was the one that made that great. And so pay me more and, like, make sure I keep this great job I have. And Jim realizes, like, oh, I need to have constant unfiltered access from the people that are delivering the service to my customers. So he, what he would do is, like, he would instruct his driver. Every time we see a brown UPS truck, you are to pull over and he would get out, no matter how successful he was, and, and he would talk to the driver.
- [70:01]
Brad Jacobs
I love it.
- [70:02]
David Senra
Unfiltered information, same thing. People would go and they try to meet Sam Walton in Bentonville, Arkansas, right? They'd show up. They even have an appointment on the books. And they'd walk into the office and they're like, hey, I'm here to meet Sam for our, you know, 7am meeting. And his secretary's like, he hopped on because he used to fly his own plane. He left at 5am this morning and he went to, you know, this Walmart over here. And he's hanging out and like greeting customers and talking to the people stocking the shelves and everything else. But this constant. I think there's a lot of wisdom in what you said in your book, basically, is what I'm saying. It's like you see this over and over again. They want unfiltered access from the front lines. They don't want the information to be massaged or presented in a manner that seems good.
- [70:42]
Brad Jacobs
So Todd Combs is one of Warren Buffett's managers. And we were talking on a Saturday about, I don't know, 10 years ago, eight, nine, 10 years ago, when he was getting on the JP Morgan board and he was kind of moving up in the world, stuff like that. I lost touch with him. But really great guy, really smart guy. And he said, what are you doing? I said, I'm reading employee surveys. I'm reading all the employee surveys from the whole company. Of. We ask him two questions. What's your single best idea to improve the company and rate your job satisfaction scale of 1 to 10? And sometimes we add a third one of what it will take to make it a 10. And I just go through all these one by one, because I feel like I'm talking to every employee and learning on that. That's amazing. So what's so amazing about that? So I was just talking to Bezos, and Bezos was reading customer service. Reading customer service. So I'm talking. So he's talking to customers. I'm talking employees. But it's the same concept. You need feedback loops. You don't know how you're doing unless you have radar, like sending beep, beep out there and seeing how it comes back. You have to have this very intense feedback loop.
- [71:41]
David Senra
This is why I'm so obsessed with what I'm doing, because nothing we're doing is new. You had all these people that ran all these kind of experiments for centuries, and they built great companies. And just because, you know, they passed on and maybe the company's not around anymore, it's like, there's. So there's a treasure trove of data in there. So, like, Bezos idea. I love where he would publicize it. Used to publicize in the very early days of Amazon. Jeffmazon.com, email me. And he read part of the. One of the reasons that he figured out, he's like, oh, we can't just sell books. Like, I could sell anything. People. He'd be like. He would send emails to, I think, like, the top thousand customers. Like, what else would you buy? And one guy, he had this epiphany because they'd be like, hey, I want toilet paper, I want groceries, whatever. One guy's like, I want windshield wipers. And he's like, windshield wipers. If this guy wants windshield wipers, I'm gonna be able to sell everything. Like, it is a true everything store. But I Was thinking about this recently because I just read this book, translated from French, about the Michelin family dynasty, which starts out in 1891, selling tires in France. You're selling tires. There's like 350 cars on the road, for God's sake. But there's a line in the book that is related to all this where they start. The two brothers have to take over this failing factory and they don't know what to make because most of the products that they're manufacturing are unprofitable. They're under bankruptcy. They're one profitable product which. So they eliminate everything else and they focus on the one profitable product, which is a rubber brake pad for horse drawn carriages.
- [72:58]
Brad Jacobs
Say that again though.
- [72:59]
David Senra
A rubber brake pad for horse drawn carriages. This is 1888. And so it takes them like a year or two to figure out like, hey, we should manufacture rubber. And there's two twin phenomena you talk about.
- [73:09]
Brad Jacobs
Get.
- [73:10]
David Senra
Remember what justice said, get the major trend, right?
- [73:12]
Brad Jacobs
Yeah.
- [73:12]
David Senra
They're like, well, horse drawn carriage has been around for a while. You know what's going way faster? Bicycles and then cars. Even from a small number, like, we need to go to where the technology is going. But the point being is like, so we need to make more products, we need to make rubber tires. And the guy took over a factory, he's like, I don't know how to do that. So his answer was he would go, and it sounds just like what you do. He only had like 50 employees. They were making the rubber brake pads. And he would just ask questions. He's like, I came to them and I admitted my ignorance. I go, know nothing about rubber manufacturing. Why'd you do that? Can you explain to me, can we. What if we did and not in like what you just said. You said something about like, not like coming down from on high. It's like a peer almost like, teach me.
- [73:49]
Brad Jacobs
Yes.
- [73:49]
David Senra
And he's like, it was wildly effective. And he's got a great line in that book. He's like, it turns out the guy that handles the material for eight hours a day while the CO's in the office has something to teach you. Like he's going to understand something about that process because you have like a bird level view. He has a very particular job and he found it very instructive. And he's like, it was a wonderful way to learn the business. And then that led him to like, oh, now I know how to make things. And then from there to grow and grow and grow. And I just absolutely love this idea. It's like, you should have this unfiltered access, unfiltered information over and over and over again.
- [74:23]
Brad Jacobs
Completely. All the different constituents in an organization need to be talking to each other, needs to have feedback loops to know how they're doing. If you're not asking your customers how you're doing, you may think you're doing a lot better than you really are.
- [74:37]
David Senra
How do you figure out how you're doing in your position?
- [74:40]
Brad Jacobs
I ask all day long. And we have different modalities of anonymous surveys and 360 reviews. And I'm interacting with the teams nonstop all day long. I'm working on people's offices. What's going on? What do you think of this? What do you think of that?
- [74:54]
David Senra
You like the. You have this great line in your book where it says, I love working with outrageously talented people to deliver outside returns for shareholders in public stock markets.
- [75:03]
Brad Jacobs
I love that.
- [75:05]
David Senra
This constant feedback from the public market.
- [75:07]
Brad Jacobs
It's fantastic.
- [75:08]
David Senra
You love it?
- [75:09]
Brad Jacobs
Yeah. I don't always agree with it, but some of it. There's always some truth in it. You get free advice from the smartest people in the world, the global allocators. People have raised billions of dollars from pensions and endowments and sovereign wealth funds. And now they're analyzing what you're doing and they're giving you advice. They're telling you, this is what I like. This is what I don't like. Okay, you don't have to. Actually, you mathematically can't agree with it all because a lot of times you get conflicting advice. People saying, you're going right, you should be going left. The other guy saying, you should go left even more. So it's good to hear all this stuff. It's good to hear what people are saying. But then you have to go within yourself and you have to. You gotta make the decision. You have to be an adult. You take in tons and tons of information and opinions and beliefs and data as much as possible. Then you've gotta kind of just ignore all that. Just go inside and say, this is what I wanna do. You gotta make the call. That's what a CEO does. It's what a leader does, is you make the call. But you have to get all that input. Otherwise you're in a. You're just a bubble chamber, echo chamber. You're just hearing your own thoughts instead of others. You want people challenging your thoughts all the time.
- [76:19]
David Senra
I think for a long time, like, one big goal was like starting a company and then taking it public. And now I talk to A lot of founders and even the ones that raise a lot of money and they don't want to ever go public. Do you have any.
- [76:30]
Brad Jacobs
I love being public.
- [76:31]
David Senra
What would, like, what advice would you give to somebody that, say, 30 years younger than you? They're trying to build a great company, they've raised a bunch of money, but they don't want to go public.
- [76:40]
Brad Jacobs
Well, they have to be at a level of maturity of the company to go public. Yeah. Have to be preferably profitable.
- [76:45]
David Senra
There's. There's a bunch of them, like, never.
- [76:48]
Brad Jacobs
Want to go public.
- [76:48]
David Senra
Yeah.
- [76:49]
Brad Jacobs
Yeah.
- [76:49]
David Senra
That are. That reach that criteria and are choosing not to.
- [76:52]
Brad Jacobs
You know, it'd be interesting to ask them why. What's the reason why you don't want.
- [76:56]
David Senra
People think. Yeah. I can't speak for them, but I think they're like, maybe the scared of the public scrutiny, the hassle, the.
- [77:02]
Brad Jacobs
But that goes back to what we're talking about an hour ago is. So they might have a core belief saying, I need everybody to always be, like, saying great stuff about me, which is never gonna happen. And they may think like, gee, if I go public. When you're public at any moment in time, you have people in favor of you and people who are naysayers. You have people who are selling and buying. The people selling think you're overvalued. People are buying. Get the joke. And they understand you have a real business plan here that's gonna create much more value. So you always have those two different things going. Maybe those people don't wanna hear the naysayers. Maybe those people don't understand that naysayers sometimes can help you correct your own path. Can tell you, gee, you know, maybe I'm cutting costs too much. People come in and say, you're cutting cost too much. I visited one of your locations. I didn't think the service was so great. Oh, wow. I didn't know that. Thank you for telling me that. So now I have to invest more rather than cut costs. You have other people who say, you know, I'm looking at your numbers here. Your margins are growing, which is great. That's only half the half the situation here. The other situation is, what are you doing with the top line? What are you doing with your price and volume? What are you doing with your organic growth? In my business and all my businesses, the only two things I had to do in the end in order to get great valuations and create shareholder value were grow the top line faster than the competition, faster than the market be taking share and growing the margins, increasing the margin, increasing the profit margins. If I did those two things, everything else flowed. Everything else flow from that. But those are the two main things. In order to do those accomplish those two things, you want as much input as possible. You want as many, many chef, many chefs in the kitchen as you possibly can. The public gets you hundreds and thousands of voices. So it's amazing data. It also being public allows you to build a brand much faster and much more voluminous.
- [78:42]
David Senra
Explain that part.
- [78:43]
Brad Jacobs
So you want to be a magnet for talent, for drivers, for people in the branches, for people in mid level management. You want to, you want to be going back to what you said before. You always want to great talent coming in. Well, if nobody knows who you are, they're a little skeptical about joining your company. If you have research written about you by bunches of firms and you have press releases and a public website and you're very well known what you're doing, it's very clear what you're doing. People say, okay, I get it, you're a known quantity and I like this, I buy into it. I like what you're doing. I want to join the company. So in order. And then you can pay them, you compensate them with stuff, they can look on their iPhone every day and see the value of the compensation. If you're private, you give people these phantom shares or whatever the compensation plan is, they don't really know the value of it until they sell it someday. And it may be very different than what they thought it was all along. So from a compensation point of view, which is a big element of success in these high growth business plans, being public is fantastic.
- [79:35]
David Senra
Was there ever a time in your career where you're like, maybe I should do, should do a private company instead? Or you were pretty much all in on it.
- [79:41]
Brad Jacobs
I've been doing public since 1992 and I've nonstop and I'm, I like it, I enjoy it, I find it very helpful, very constructive. I like the pressure. I like the ability to hear what the street says and then agree with what I agree with, but disagree with what I think is wrong. What I feel passionately and have evidence to support, they're wrong. So sometimes the street, particularly like the hedge funds, they're very focused on like this quarter, like the next 90 days. That's a terrible thing. Long term, you don't want to be focusing on just what's good for the quarter. You end up, you see these public companies that go out and they cut costs in the field, that hurts customer service or hurts employee morale. And they're understaffed, which is even worse than being overstaffed, which is. Which is bad. And here it's a completely different story. So, yeah, I like being public.
- [80:28]
David Senra
You said something interesting. I like the pressure.
- [80:30]
Brad Jacobs
I do thrive on it.
- [80:32]
David Senra
What do you mean by that?
- [80:34]
Brad Jacobs
So many people give you the money, whether it's a retail individual, whether it's a high net worth family, whether it's a sovereign wealth fund, whether it's a pension plan, whether it's an endowment. All these people are invested long only funds, mutual funds. All these people are giving. They're wiring money to buy your shares. This is a intense pressure. This is probably the biggest pressure I have in life, is to make sure that I do everything I possibly can to make sure I give them back more money than they gave me, make sure that they invest in the company. And like, if you look at my neighbors and my friends, I don't know the exact number, but I would guess over 90% of them are invested in the company. And that's what it's been over time. Well, that's the pressure, man. That's like, wow, I don't want to disappoint them. These are my relatives, these are my friends. These are people I really love. These are people. People come to say, look, I believe in you so much, I put two thirds of my, my retirement plan in your stock. Just single. No, no to forget. Just diversification. Boom. I'm going all in on Brad and his team. Well, that's a lot of pressure. I like that pressure. I enjoy that pressure. That motivates me, that inspires me, that makes me feel I have something to do here that's important.
- [81:42]
David Senra
I think that's so important to like, put that out because we were talking about the negative self talk and like, you know, just living a pretty crazy life where it's like, you want to work seven days a week or you're just completely all in. And the way, again, this goes back to. You can hear a sentence and just be like, oh, I feel that way too. And it kind of changes the way you approach things. And I remember reading about Herb Kelleher, which is the founder of Southwest Airlines. You know, it's such a. It's such a crazy story that, like, in an industry where bankruptcy is the most common, you know, outcome, the guy had his. His company was profitable for 40 straight years. Just nuts. And he's like a nut job. He's drinking a fifth of bourbon every day. He's chain smoking cigarettes that's not me.
- [82:19]
Brad Jacobs
No, no, no, no. He's like, I don't advocate that. No.
- [82:21]
David Senra
He wouldn't sleep. He's like, it was. He's just hilarious stories in his life. And I thought he was like, he just lived on the edge and completely like, all in. It was a. Where they tried to get him. You know, he chain smoke and then drink a fifth of bourbon every day. And they're like. But then he had like prostate cancer or something like that. And they're like, you should stop smoking. He's like, I don't smoke with my prostate. But that's not the thing that I remember. The thing that I loved in an interview one time. They're like, you have like, you deal with a ton of stress. Like, how do you handle it? He goes, I don't handle it. I like it. He wanted the stress. He's like, I want to be in the game.
- [82:58]
Brad Jacobs
Yes.
- [82:59]
David Senra
He was an attorney. He didn't start his company. It was his first company. He was an attorney to. Was 35 years old. And he decided, hey, I'm going to try to do an interstate or intrastate airline. And like then he.
- [83:09]
Brad Jacobs
He had.
- [83:09]
David Senra
It was like four years of legal fights before he could even take his first flight. He's just like, I love this shit. This is what I want. I want the pressure, passion. What I love about this is, it's in your book.
- [83:18]
Brad Jacobs
You.
- [83:18]
David Senra
You constantly talk about the. The other people, the other entrepreneurs, other investors, other CEOs that you learn from. Then. Then acknowledgements, all these maxims from all these other brilliant people you talk about. Obviously, Ludwig Justison. I do want to talk about. I read something on LinkedIn about other. I want to talk about the other people that you've learned from, the other founders, CEOs, executives that you admire. I want to start with Fred Smith. Since he passed away. I read his biography probably like four or five years ago and tell me if I'm wrong. You know more about this industry than I do. It seems like FedEx had to be one of the most difficult operational companies to ever invent. Like an unbelievable. You're talking about somebody who wanted pressure. Yeah. The complexity you wrote on LinkedIn, you never missed an opportunity to spend time with them and you admired them. Could you just tell, like, why?
- [84:10]
Brad Jacobs
So Fred endorsed my book. Yeah, I saw and I was very touched. He did that. Yeah, he was a competitor, literally Wall street competitor who still endorsed my book. So Fred was amazing guy. I mean, this is a very special. You meet people in life that are just Special that are certain integrity. So I met Fred for the first time in 2013, and I was doing a bunch. I came out of nowhere from this industry. I got in in 2011, but I really started doing a bunch of acquisitions out of nowhere. And suddenly, like, I was on the front pages of the trade journals and I was in Atlanta at the national association of Manufacturing NAM conference, and Fred was the keynote. So I was in the audience watching him and somebody said, what do you think of Brad Jacobs? I go, oh, my God. My heart starts being, oh, my God, Fred Smith's about to, like, destroy me. My brand is going to be completely crushed. You know, the icon of the industry is going to say, oh, yeah, I don't believe he's really. And he said, I really like watching that guy work. He said, he is coming into this industry with courage and, and buying things left and right and has big goals and big ambitions, and I'm going to keep an eye on that guy. And I cried. I said, wow, Fred Smith, like, saying great stuff. So I went up to him afterwards, after the speech was over, And I said, Mr. Smith, Brad Jacobs, I really appreciate what you said. Well, first of all, I'm Fred. And that was the beginning of a great, great friendship. And we got together many, many times. Of course, he was on the business council. He was the longest serving member of the business Council over a quarter of a century. Oh, wow. And I go to every business council meeting I possibly can to meet other CEOs and to hear what other people are thinking. He was just a generous guy. This was a guy who had vision, he had passion. Talk about grit. I mean, he was flying around all the time, everywhere. Vietnam, he was decorate. He was flying helicopters with people shooting bullets at him to go get Marines who had been. He was a Marine.
- [86:06]
David Senra
Yeah.
- [86:06]
Brad Jacobs
Marines who have been killed. But you don't leave any Marine behind. He'd go in there, he's risking his life with bullets like shy. Every shooting at him to go get the remains of a dead Marine. Putting his own life online. He got a purple Heart. He got silver. He got, I mean, serious, serious, serious courageous, high integrity guy. And everybody, everybody loved. Everybody loved Fred. Everybody loved Fred.
- [86:28]
David Senra
The opening paragraph of his biography is the craziest opening paragraph I ever heard. I'm just going to paraphrase it essentially, like, you know, he's in debt. He ran through like his, the. His Greyhound, his dad's Greyhound bus. Millions. I think he burned through like 15 or 20 million. His planes are about to be confiscated. They just got fired by his board. The FBI is investigating him.
- [86:52]
Brad Jacobs
He goes to Vegas.
- [86:53]
David Senra
Yes. And then they're like, he thought, he thought. And he was like 30 years old at the time, so still young. But he refused to let his federal expression dream die. And the line was just like, he thought of suicide. And then the next paragraph is like. But the idea of Fred jumping out a window is ludicrous. He's more likely to throw somebody out of a window. He's just like a guy that you like. He was like the Terminator. You couldn't stop. He just wouldn't stop coming. There's a few lines.
- [87:17]
Brad Jacobs
No, I don't recognize that in him. So throwing something out the window.
- [87:20]
David Senra
I mean, I was at 30. I think he might have been a little different.
- [87:22]
Brad Jacobs
Well, maybe, yeah. But I was a direct competitor of him in transportation and logistics and intermodal. Not in package, because we didn't do package, but pretty much all the other lines of business, we competed against him. He was generous, he was charitable. He would always take a meeting with me. He used to come to my house. We'd spend hours and hours and hours talking about everything.
- [87:40]
David Senra
This is what is so special. I know it's part of humanity in general, but entrepreneurship in particular is just like. You see this over and over again, just how generous these people are with. Because they know how fucking hard it is. They just went through all this and now we might be 15, 20, 30 years different in age, but it's like, just like Ludwig Jesselson did when you were 23. And in many cases, like what you did with the book, like the idea, like, think about Sam Walton, right? He wrote his autobiography. His cancer was all over his body. He was in pain. He knows his time is towards the end. And what does he do? He spends a big chunk of the last time he had left saying, this is what I Learned in my 6 decade long career. That is a gift to future generations. And then in the book, they're like, somebody, I love this part. Cause they're in the book. They're like, people ask me all the time, could another Walmart story happen? He's like, yeah, it's probably happening right now. And it was Jeff Bezos going around with his copy of the book, writing it, annotating it, giving it to the executives, the early executives of Amazon. It's such a beautiful thing that Fred would do that. It's a beautiful thing you did for your book.
- [88:40]
Brad Jacobs
Fred and Amazon didn't get along.
- [88:42]
David Senra
No, no, no. I'm saying. But like, in general. Yeah, obviously. Well, yeah, I can see why, but my point being is the transfer of. Even for competitors. He was. Fred was your competitor, but he's transferring knowledge to you. That is, I don't think people understand how much that goes. I'm glad you just said that because. Yeah, you can see in the books you hear stories like that. He endorsed my book. Exactly. You hear stories like that all the time in private. And for you to say that, I think it's really important. There's a few things I pulled out from his biography that just remind me of you. And I'm curious if, like you, if you agree with some of these things. One, the amount.
- [89:14]
Brad Jacobs
If it's about Fred Smith. If I don't have that trait, I should work on getting it.
- [89:18]
David Senra
Okay, well, perfect. The amount of information. So, like, think about it like he started in FedEx in 60s, I think something like that. No, after Vietnam. So maybe early 70s. But in the 80s. He says that he estimated during the 1980s he spent four hours a day reading. He says he found he relied quite heavily on his own vision, backed by assimilating information, which you've mentioned multiple times so far from many different disciplines at once. You've talked about that in meetings, you've talked about in trade journals. You talked about all the research you do. Right. This is his quote, though, that I wanted to read to you. The common trait of people who supposedly have vision is they spend a lot of time reading and gathering information and then synthesize it until they come up with an idea. That sounds like you to me.
- [89:58]
Brad Jacobs
I like that. Yeah. Going back to what I was saying before, you don't want to be rigid in your thinking. You want to be open minded, you want to be flexible. You want to be scientific about it. That if new evidence comes along that disproves your theory, then modify your theory, go by the evidence, go by the facts. And you want to get. You want to interact with people who you respect and you want to be picking their brain all the time.
- [90:17]
David Senra
But you're also like a lot. The way to describe it is like you're. You're also alive and paying attention. Like the story in your book where you're like reading a magazine in bed on a Sunday morning and you read about like these waste management companies making like $500 million in profit. You're like, whoa, what? Like they're picking up trash from one spot and bring it to another. I need to learn about this industry. But that's my point. Like you're, you're. People like Fred, people like You, I think, you know, there's a ton of people that have the same thing where it's like they're. The whole world is like a classroom if you're actually paying attention, like you can pick up ideas all over the place.
- [90:49]
Brad Jacobs
So the waste management business I contrasted to the oil business. The oil business was a lot more complex. We were negotiating complicated long term contracts and chartering vessels and negotiating processing agreements with big major oil companies and hedging and I mean it's very, very complicated, complex business. When I read that about the garbage business, I said that is so much easier picking up. That's a simple business. It moves some garbage and send out an invoice. I definitely think I can do that. And it seems like they make a lot of money and the trend seemed in the right direction. So yeah, you want.
- [91:21]
David Senra
And the application of technology, which is. I love how at the end of your book you have essentially what are all some key technology developed by humans starting back 300,000 years ago and you move forward. I thought that was a beautiful way to like just put that in the.
- [91:36]
Brad Jacobs
So I got that from Kurzweil, by the way. Ray Kurzweil. So Ray Kurzweil, huge mentor of mine, only met him once, met him for about six hours to do. But I've read every book he's written, I've read every article about him, I see every YouTube he's. I mean, I'm a Ray Kurzweil fan. I mean I really. And what I read in the Singularity is near. In 2005, 2006, when that book came out was amazing. Where it was a chronology of the universe going. You know, my meditation, I go back to space and time. Kindred spirit here. There's somebody who thinks in large scale of time. And one of the key things that have happened over the last 13 billion years and reducing that down to a couple hundred points, I thought that was real helpful. So I modified it a bit and made it more specific to business. Things that would be applicable to business. But the main trend going back to Mr. Jefferson about. You gotta get the main trend right. The main trend for the last 2 million years has been humans creating tools, aka technology to do things, to outsource to those things that do better than us, that free up our time. So whether it was fire, whether it was a wheel, whether it was the printing press, and more recently all the digital electronic stuff we've done and all the Internet and now artificial intelligence and robotics and nanotechnology, this is the trend. The main Trend in life and therefore in business is technology outsourcing. Our senses, outsourcing, our memory, outsourcing now our intellect, our speech to computers, to the cloud. This is big. This is really, really big. So when I looked at 55 different industries before I picked building products, I ruled out a bunch of them. So this looks like an interesting industry. But I think AI and automation are going to kibosh every day. And I didn't do it. And I mentioned in the book there was one particular online education company was called Chegg. I said, I don't know, it seemed like you got a good business, but I think these, these AI is going to come in basically do that for free. Well, you know, and I said, I think the stock might come down. Well, stock came down a lot, came down from 50 to single digits. So fortunately I made a good prediction there. As Yogi Berra said, predictions are difficult, particularly when they're about the future. That turned out to be a good prediction. Why was that a good prediction? Because to me I'm looking at it saying the main trend, the long term trend is to use technology to do things that we've been doing ourselves. And so I'm always trying to look at these different work streams and say, is that something that can be automated? Is that something that's going to be AI or robotics going forward? And then capitalizing on that and the.
- [94:11]
David Senra
Opportunity to always do something slightly better, which is, and invent tools to do so. Technology is, it even starts out when you were talking about collecting, sometimes a.
- [94:20]
Brad Jacobs
Lot better, not slightly better.
- [94:21]
David Senra
But the good thing is this is not exclusive to the time we live in. It's a constant throughout our experience. You can go and look at the. When you guys were collecting, all this is you said before fax, before email, you were collecting all the information for Amurex 40 years ago. And then the waste management, when you're like, hey, how I should get into this? And then you realize, wait, they're not even using technology to figure out the most efficient route. And this constant application to technology is one of the things I'm glad it was on my notes, but I'm glad you brought like directed the conversation there because the way I thought about this is really crystallized in my mind. When I read Andrew Carnegie's autobiography, right, which is probably written 130 years ago. And for whatever reason, if you talk to somebody today, they don't think of like the production of steel as technology, which is like a crazy thing at the time it was like they literally invented a new and a better way. And then everything in the world was gonna be made out of this. And so what I do is like, when I'm finished reading a book again, we go back to this idea that you and I share. We have to like, distill it. You're not gonna remember 250 pages, but you'll remember a paragraph or a sentence if you can. And Andrew's a young person getting into an existing industry. It's a new industry, but it's still an existing industry. Most of his competitors were much older and they were very resistant to your point, Resistant to change. You cannot be resistant to change. You have to embrace the major trend, which is what your mentor told you. And so I was hearing the criticism that his competitors almost like when you were in that business and the guy took you out to lunch and it's like, slow down. I used to be the first, now I'm the second. That's a terrible way to do business. Like take your competitor out to lunch and be like, stop. Being better than me motivates you. Yeah, it's not gonna work. But the way I would summarize the main theme from Andrew Carnegie's book that then reappears over and over again on these stories is invest in technology. The savings compound. It can give you an advantage over slower moving competitors and can be the difference between a profit and a loss. And you see that over and over and over again. It doesn't matter if it's steel waste management software. Over and over again. It's like the best entrepreneurs, the best CEOs, the best executives, they're not scared of technology. If you're scared of it, you're going to get destroyed by it. They embrace it and they invest heavily in it. And again, the benefit I have is like, I'm reading about a chocolate company that was started 80 years ago and they have some of the most advanced robots making chocolate. I'm reading about a tire company from 150 years ago. They watch their costs and they're very efficient in how they spend their time and their money. But they invest heavily in technology. No one thinks of Walmart as a technology company. But if you go back in 1979, right, he's Sam's in his 60s and they're like, hey, we're doing everything by hand. Our business is way getting way too complex. We have all these distribution centers. Think about the logistics. You would know all this moving, all this material where it needs to be at the right time. We need to invest in computers. And Sam at The first thought, he heard computer, he heard overhead, he heard expense. I can't do that. And then he was slowly allowed himself to be convinced by the talented people on his team. And he wind up when he decided to invest, he. He would dabble. He invested $500 million in $1979. Who knows what that would be today in the most advanced computer system to handle his logistics and distribution. And that was an edge that not another retailer on the planet had, or at least in America had. That he had the technological edge over the rest of his competitors.
- [97:51]
Brad Jacobs
In business, you always want to be finding waste. Cause there's always a sum and eliminate it. You always want to find inefficiencies, and there always are. You want to reduce them. Technology helps you with that. Walmart's a big tech company. So my chief supply chain officer came out of Walmart. Very, very sophisticated guy. It's all about technology, all about using tech in order to get the data and then being very data driven.
- [98:11]
David Senra
I would argue that if anybody. I don't think you could be the leader in any industry and not also, we don't think of them as tech companies because we think tech has to be like Google or Facebook. It's like, no, they're all tech companies. I just did. I wanted to do more than just like American entrepreneurs because.
- [98:28]
Brad Jacobs
We have an outsized share of entrepreneurs.
- [98:30]
David Senra
Everybody's like, you should do more xyz. It's like, why are they all American? And I understand that. And my point being is like, if you think about entrepreneurship in like the market economy, it's only a couple hundred years old. It's like, well, America's kind of dominated there. So it makes sense if 75 or 80% of my episodes are about that. But I did one on one of the most successful entrepreneurs in Europe named Amancio Ortega. And I didn't know anything about him. All I know is that is H and M. Zara.
- [98:56]
Brad Jacobs
Oh, Zara. Inditex.
- [98:57]
David Senra
Inditex. Yeah, yeah. And then you're reading about this, you're like, it's not a fashion company. It is a technology company. What does that mean? He built the logistics and the system to say me and you can walk out on the street right now and we can see, oh, there's a trend here where all these ladies are wearing dresses with whatever, you know, red flowers on them. And he can take that idea and put it through his system and he can have manufacture dresses with red flowers. And in eight, you know, 25 different countries in seven days. That is technology. He says it's like we're a technology company with a chain of stores attached to it.
- [99:29]
Brad Jacobs
So Zara Inditex is a big customer of GXO Logistics, one of the companies we spun off from xpo and GXO runs a lot of their warehouses in Europe. And it's exactly what you're saying. It's E commerce. It's trying to do things very efficiently and very quickly and very accurately. And you need technology to do that. You need robots and need AI. Every business, every single business is going to see more automation and more AI. People have to get on the program on that or they're going to be dinosaurs.
- [99:55]
David Senra
100%. I'm going to go back to Fred Smith. He says something that sounds Fred wasn't detect.
- [100:00]
Brad Jacobs
Oh, of course. In a big way.
- [100:02]
David Senra
Yeah, of course.
- [100:02]
Brad Jacobs
He's always talking about this new invention he just did in the removing packages and robots. And we were trying to figure out some way you could use automation. LTL, because he was a big LTL. FedEx is the biggest action. LTL and XPL is big LTL. The automation is not there yet to get because all the closed spaces and all the people still involved in that. But it's going to be packaged. You have automation now. Packaged automation is much further ahead.
- [100:24]
David Senra
Yes. So there's something we haven't touched on. I have a question for you. And this is a quote from Fred in his biography, says you have to be absolutely brutal in the management of your time.
- [100:34]
Brad Jacobs
Oh, yes.
- [100:36]
David Senra
Do you have any insights?
- [100:37]
Brad Jacobs
Look, if you want someone to disagree with that, you have to talk to somebody else. 100% agree with that.
- [100:41]
David Senra
I'm curious how you do this though.
- [100:43]
Brad Jacobs
So time. So when you're a CEO, when you're an executive, you only got two things. You got time and you get capital and how you deploy that time and how you deploy that capital equals results. So it's your time and it's the time of the people of the organization. So when I was running XPO, we had about 150,000, a little more employees worldwide. See, each one of those worker, the senior manager, worked long hours, but the average worker worked eight hours a day. So you had eight times about 1.2 million hours a day of work getting done. If you've got people very focused and very motivated and very well trained and feel good about the company and feel good about their job, that productivity of that 1.2 million hours a day is going to be a lot more than if the conditions I just mentioned are not present. So managing People's time folk. Putting them in the right priorities and ranking what people should be spending their time on is very, very, very, very important to success. Now, how do I spend my time? I spend my time deliberately and consciously and intentionally on the things that I think make most amount of value for the, for the company.
- [101:53]
David Senra
How many things at any given time are you having to focus on?
- [101:56]
Brad Jacobs
No fair amount. So if you're CEO, you're managing, you know, 15, 20 different things, always. You're managing people, you manage technology, you're managing budgets, you're managing investors, you're managing infrastructure, you're managing transportation, you're managing logistics, you're managing pricing, you're managing procurement with the vendors, you're managing customer relations, you're managing sales. There's your manage salesforce excellence. I mean, it's just, there's about 20 things that are your life. Like that's what a, that's what a good CEO does. The problem with a lot of CEOs is they've come up through just sales or operations and they're good at that, but they kind of just delegate the other 15 things. That's really part of the CEO job. You look at the great CEOs, the CEOs have created a lot of alpha, a lot of shareholder value. They've been in each one of those 20 or so things. You talk to a Dave Cody, or you talk to an Ed Breen, or you talk to Larry Culp, you can talk about any of those 20 things and they have things to say and you can learn from them. You talk to CEOs who haven't created a lot of value, but not really good at this game. They'll know four or five or six or even half of those 20 things, but they don't do the other. They don't do the other part. You gotta be in all of them, but you're not in all those things in equal measure. Some things you don't have to spend as much time on the people things and compensation things I actually spend a lot of time on. So that's core, that's critical to get right. That's something that if you get wrong, you waste it budgeting. I spend a lot of time going on the budget. Customer satisfaction, I spent a lot of time on that. The employee serv, the employee engagements, going out to the field, doing the town halls, doing the zooms. I'm all in on that.
- [103:29]
David Senra
But when you say that the CEOs that you think might not be doing the best they could, are they delegating too much.
- [103:34]
Brad Jacobs
Yeah, they're, they're, they're not, they're, they're afraid to do the ingen. I'm making generalizations. There's always exceptions, but generally speaking what I find is they gravitate to the stuff they like and that they're good at and they kind of just don't do the stuff that they don't like or they aren't very good at. And you can't, you've got to be. If you want to be a good CEO and have a high performing performing company and be in the top decile of stock performance like United Rentals and XPO were both top 10 stock performers last decade. That's not random at both those companies because it was the same principles, same structures. You've got to have CEOs and they did that are in the whole thing and understand from A to Z what running a business is and how you create shareholder value and see the whole picture of the levers. So I always tell friends who are, and I have a lot of friends who are portfolio managers or analysts on the buy side. I say when you bring a management team in, you need to ask them what's your stock price going to be five years from now? And what are the levers that I have to believe that's going to get you there? And if that CEO tells you that's a great question, I'll get back to you. Short that stock or at least don't buy that stock. Because that's the first thing the CEO has to know. First thing is a CEO and the senior management team has to know with great specificity. Here's where we are right now. The stock price. We want to get massive outperformance and get to here. That's great. That's just the beginning. Here are the levers of how I get there. Here are the levers of the things that we must do as an organization that will improve our profitability, improve our multiple, generate free cash flow. Just how are we going to get to there? And in my case it's not that hard because when you do the graph, the first two bars, when you do the levers comprise the vast majority of what you have to do to create the value. And those are buying companies. Right? Meaning being very disciplined what you pay and looking at lots of acquisition candidates at the same time. So you don't fall in love with any one of them. And so you have alternatives and you don't.
- [105:42]
David Senra
What's the distribution there? So you've done over 500 acquisitions throughout your.
- [105:45]
Brad Jacobs
My teams, and I have. I like to give credit to my team.
- [105:47]
David Senra
Yeah, you and your team, for sure. So you. You and your team have done over 500 acquisitions. You've looked at how many thousands and thousands?
- [105:54]
Brad Jacobs
I mean, many thousands, like 100,000.
- [105:56]
David Senra
Do you think it'd be that?
- [105:57]
Brad Jacobs
I've lost count.
- [105:58]
David Senra
Okay.
- [105:59]
Brad Jacobs
I don't know if it's 100,000. When I say look looked at in depth. Yeah, but in the thousands. Many thousands.
- [106:04]
David Senra
Okay. Going back to the time management, though, I think especially in, like, the age that people are growing up in, like, where, like, there's a shortened attention span, a lack of focus, in my opinion, and, like, really easy to give into distraction. Like how you sound like you're almost not impervious to distraction. That's not the right way to put it because I know how you're. You're going to be humble when you describe yourself, but how do you avoid being pulled into things that are not prioritized?
- [106:31]
Brad Jacobs
So many, many people know Warren Buffett. I barely know Warren Buffett. I met him a few times, but he's not a close personal friend. I wish he was, but he's not. But I know a lot of people who are close to me who are close to him, and most of them have the same story. So you must tell this to everybody. He tells people, I'm the richest person. I'm the wealthiest person in the world. And they say, well, Ms. Buffett, you work for one period of time, but I think you're number four. Whatever. He says, no, no, no. I can prove that I'm the wealthiest person in the world. I say, why is that? And he reaches in, he brings out his daytime or his calendar, and he says, Monday, I have one appointment. Tuesday, I have no appointments. Wednesday, I have no appointments. Because he controls his time. He controls his time, and he has no problem saying no and refusing people time.
- [107:13]
David Senra
I think I have a problem saying no, though. This is why I'm asking you.
- [107:16]
Brad Jacobs
Well, you need to solve that problem. That's a problem you've identified. That's great. That's half of the solution of the problem. Now you need to work on it.
- [107:22]
David Senra
He has that great line where he's like, the difference between successful people and really successful people is really successful people say no to almost everything. So, like, you have 20, you know.
- [107:29]
Brad Jacobs
Whatever the numbers do that.
- [107:30]
David Senra
Yeah. So whatever the number is, like, you have 20 things that. That, you know, you're. You're focused on at the CEO level at this moment. You're, you know, you know, where you want to spend your time, what you're best at. We talked about incentives and then recruiting talent. But, like, you also are one of the most. And you're not going to like this, but like, one of the most famous and wealthiest people in the world, you have an unbelievable amount of people that want your time. How do you stay disciplined? Like, you seem to be disciplined from the outside of saying no to a lot of things. Like, how is that something you learned in the last, like, five years, ten years? You liked it when you were younger.
- [108:05]
Brad Jacobs
So, first of all, I'm not that famous. I'm well known in the.
- [108:08]
David Senra
In the business community.
- [108:09]
Brad Jacobs
The business community.
- [108:10]
David Senra
That's the only community I care about.
- [108:12]
Brad Jacobs
But, like, you know. No. The average person.
- [108:14]
David Senra
Yeah, for sure.
- [108:15]
Brad Jacobs
And I'm not one of the richest people in the world. There's many people who are vastly richer than I am.
- [108:19]
David Senra
But.
- [108:19]
Brad Jacobs
But in my own modest way, I've created some level of recognition and some of wealth, and more importantly, wealth.
- [108:26]
David Senra
You should see my inbox when it comes to you. But that's fine. That's fine.
- [108:29]
Brad Jacobs
Well, I appreciate that, but I just put in context.
- [108:32]
David Senra
It's funny, because people, the way you.
- [108:34]
Brad Jacobs
Said it is a little grandiose. I don't think I am.
- [108:37]
David Senra
This is why every time I say these things to you, you say things.
- [108:39]
Brad Jacobs
Well, because I want to correct the record. I don't want to get grandiose in the wrong.
- [108:42]
David Senra
No, it's a smart move. But the funny thing is, when I did the I Had Breakfast with Brad Jacobs episode, now people are, like, flooded. Like, can you introduce.
- [108:50]
Brad Jacobs
Like, no.
- [108:51]
David Senra
Like, you had to figure out how to get to them yourself. Like, you can't.
- [108:53]
Brad Jacobs
So when I was researching after. After xpo.
- [108:58]
David Senra
Yeah.
- [108:59]
Brad Jacobs
I was looking for my next thing. No, excuse me. After United Rentals, I was looking for my next thing, and I was looking at asset management, and I went. And I went to Chicago, and I wanted to get an appointment with Ken Griffin.
- [109:08]
David Senra
Yeah.
- [109:09]
Brad Jacobs
Who now I've met. Now I know. And he's a neighbor down in Florida. I don't know. Well known well enough. And I, you know, I think he'd return my call if I called him, but he would turn down the meeting. He wouldn't take the meeting. Said, wow, that's kind of humbling. But you can't even, like, spend an hour. No. Ken is a very. And I think you. You interviewed him, right?
- [109:28]
David Senra
No, not yet. I did.
- [109:29]
Brad Jacobs
You should. You definitely should.
- [109:30]
David Senra
I want to meet him. I want to meet him. So if you can introduce me, please.
- [109:32]
Brad Jacobs
He could be president of the United States.
- [109:34]
David Senra
He's incredible. So this is the good thing about when I do remember, most of the people I study are dead. When I do episodes on people that are living. This is why I was asking you some of the questions. Because, like, I'll do this episode, it reaches a very valuable community and they're really helpful. And then I get all these crazy stories about this guy's even more remarkable than your episode. And I got it about you and I got it about Ken. And then I was like, oh, I got it. Like, I definitely want to meet Ken.
- [109:57]
Brad Jacobs
Ken's in different league than I. Ken is like way, way up there.
- [109:59]
David Senra
He's a very fascinating person.
- [110:01]
Brad Jacobs
You should definitely do something on him. You asked how I manage my time. So I have a chief of staff. He used to work in the Oval Office, and it's the most important person in the world calendar. So, I mean, he's always very, very good. And more importantly, he understands what I'm doing, he understands my priorities, and he understands what I was talking to you before, like, the two most important things that I gotta do are have organic revenue growth better than the competition and a margin expansion and everything falls. He understands that. He understands that in order to do that, I have to focus on people, I have to focus on technology. He understands the different levers to do that.
- [110:37]
David Senra
So you run every decision between those two?
- [110:39]
Brad Jacobs
Yeah, that's my framework in business. My framework is because I've learned if I do those two things, and it takes 100 different things to do those two things well, but if I do those two things well, I will create dramatic shareholder value if I buy companies at significant lower multiples of profit than I trade at. Monday morning, at 7 o', clock, after we announced the acquisition, I've already created Alpha for my shareholders. That's a nice way to start the week. Number two, if I then double the profit over the next three to five years, then I'll get a nice multiple. And if I generate, those are the two main things I need to focus on. He understands that. Now, what he also understands is all the components, because in the monthly operating reviews and all the correspondence, we're very good at communicating with each other what's important and what's not important. So he knows my priorities and therefore he's a great gatekeeper.
- [111:30]
David Senra
Is there anybody that could tell you when you're getting off track from what you profess to say?
- [111:35]
Brad Jacobs
Everybody around me. So if I'm spending too much time on, like, I'M going to catch heck for being on this podcast, dude.
- [111:42]
David Senra
You're a demand for doing this, by the way.
- [111:45]
Brad Jacobs
No, I love doing it.
- [111:46]
David Senra
And it will also get to, like, I do think, you know, one of the things that you obviously accomplish with the book and like, I try to help amplify with my work is like, millions of people are going to benefit from your lived experience. You have almost 50 years, let's say 40 years of experience as an entrepreneur. It's like, how many people that have ever lived life that have done that? Most people, you know, unfortunately, they quit or they fail or whatever the case is. Like, you have so much to teach the world.
- [112:10]
Brad Jacobs
Can I comment on something about the time?
- [112:11]
David Senra
Yeah, go ahead.
- [112:12]
Brad Jacobs
There's a phrase I used to use and you brought it out to me, so I'm going to start using it again. I haven't used it recently. Is wotwam what w o t w o o n? Waste of time, waste of money. So when people brainstorm are kind of, let's do this, let's do that, someone can say wadwomp everyone else, that's a waste of time, waste of money. Like, how does that. How does what you're suggesting we do influence directly or even indirectly growing organic revenue growth or increasing the margin. And if it doesn't, wah wah. That's a waste of time. Waste of money. You only, you have limited time and you have limited capital. You've got to be directing that time and deploying that capital to things that have the greatest returns. Otherwise, it's wat wam.
- [112:53]
David Senra
And I'm so glad, first of all, it's hilarious. I'm glad that you said that you actually have other people around you doing this too, because I am kind of skeptical that no human can hit their goals and what they want to do 100% of the time. I can't imagine the complexity of running FedEx. And this guy's just like, no, you have to be brutal. There's a word like that. He picks these. Absolutely brutal is the word. Absolutely brutal in time management. Yeah, I think there's a lot of things. There's another thing that Fred Smith said that again, when I'm reading about Fred, when I was going through and rereading all my highlights from his biography, I wasn't really thinking about Fred. I was thinking about you. This, to me, feels like a lot of what I've learned from you. And this is a direct quote from Fred. He says, I believe that a man who expects to win out in business without self Denial and self improvement stands as about as much a chance as a prize fighter would stand if he started a ring battle without having gone through intensive training. Natural ability, even when accompanied by the spirit to win is never sufficient. If I look at the way you were building businesses when you were 23 compared to, you know, you can pick first million dollar company, then you look at the second or the third or the fourth or the fifth or the seventh, it's like you're not even. Like you'd go back and kick that dude's ass because of all the stuff you have learned since then.
- [114:08]
Brad Jacobs
Well, you do get better as you keep with experience, like in anybody in anything. But the principles are pretty the same. If you look at all my companies, the essential concepts are the same. That you want to have fantastic people, that you want to have rules of engagement with those people where you get along and go kill the competition instead of killing each other. That you want to have fair compensation so that everybody's in on the action here. So that.
- [114:33]
David Senra
When did you kept repeating that? When did you understand the power of incentives? Because you talk about compensation incentives a lot.
- [114:39]
Brad Jacobs
Very, very early, very early in the oil brokerage days because I used to have, we had tables, like 10 brokers at a table. And every month we pay people monthly. I'd meet with everyone and say, look, we made so much this month in the bonus pool. What percent do you think you contributed to it? And then I would add it up, it would always come to like 300%, never added up to 100%. So I had to have these difficult conversations and people said, look, you know, you. I think they're inflated with how much. But what I realized very early on is people are coming to work not because they love me. They might love me, I might love them. But that's not their main motivation. The main motivation, why they're coming to work is to make money and make money for themselves and more often to make money for others, to make money for their families, for their spouses, their kids or whoever. And that's important to understand. The motivation of the other person is really, really important. It's called theory of mind. When you understand, and a child gets that after a few years, they don't have it at first. And there's a lot of psychological studies done on that. It's important to look at things from what's motivating the other person, what's driving the other person, what's important to that other person that's good in deal making, that's good in Compensation that's good in building teams, that's good in customer relations, that's good with vendor relations. You need to understand their point of view. You can't just be in your mind. You. You can't just say, here's what I want, here's what's important to me, and I'm a bully. I'm going to go get it. Because people are just going to stick their tongue out on you. They're going to turn away and do something with else. You have to have a partnership. You have to be trading with people all the time. You got to be figuring out what will help them, what's good for them, and how can we make money together. Not me at your expense or you at my expense, but how can we go conquer the world together?
- [116:16]
David Senra
I think you're a faster learner than me because I don't think I ever thought about incentives. I think episode like 97. So this is probably like six years ago I'd read. That means I read 96 biographies before this. I get to poor Charlie Salmac, and he's really the one that got. Charlie was the one that really put into my mind about how important this was because I thought he was one of. I still think he's the wisest person I ever met and probably one of the most brilliant people. And he said something fascinating in that book where he's like, I've been in the top 5% of my age cohort my entire life of understanding the power of incentives and how it drives human behavior. And there's not a year that goes by, and he's probably in his 60s when he said this. There's not a year that goes by where I don't underestimate the power of incentives. And you would repeat over and over again, you show me the incentive, I will show you the outcome.
- [117:01]
Brad Jacobs
Remember I told you a few minutes ago that I give everyone on the top level of the company a bunch of equity, but it's locked up for five years. So I meet with my chro, who's fabulous regularly, usually twice a month, and she shows me a spreadsheet of how much the equity is going to be worth at $50 a share, at $75 a share, at $100 a share. And I look at that, look at the numbers, and I say, okay, this person has something to work for. This person's on the team, this person. That's something. I see them working really hard to get those numbers or icg. Somehow or another, we messed up the comp and maybe we Got to top the person up or wow, I can't take anything back, but maybe I gave too much equity, whatever. But at least I know where everyone's head is at because I know what's in it for them. You know, there's always that joke. I listen to radio station wifm, what's in it for me? And people are generally, they don't care about you and me, David. They care about them, which is normal. That's capitalism. That's free markets. That's a good thing.
- [117:55]
David Senra
Yeah. I don't feel it's a negative thing at all. It's like we're all self obsessed. But I do think you have a great line in the book where you're like, money. He's like, I built businesses all over the world. When you have 150,000 employees, they're spread throughout, you know, people like, oh, it's all different cultures. Like, oh, guess what? Money animates people everywhere. For the whole point, you have a great line in the book like, they're not coming to work to make Brad Jacobs more money.
- [118:15]
Brad Jacobs
Not at all.
- [118:16]
David Senra
They're doing it for their families. I love this idea of, I think it's really important to have a. I think it's tied to your obsession with like the public markets too. And what you said in your book about being very proud of building wealth not just for yourself, but for school teachers, pension plans, nurses, firemen and everything else is like the, the importance of having a, a mission bigger than yourself. I think like if you just live a completely selfish life, first of all, you would have stopped way a long time ago. Like you didn't need to. In general, people, you wouldn't have to do this. And I've seen this in a couple different places where like Jeff Bezos, we talked about him a few times today where his idea was when he started Amazon. He's like, I want to build the world's most customer centric company. So I want to be an example not just to our employees and our customers, but to other companies to see, look how you can, over the long term, you can align the interest of the customer and the shareholder. Perfectly aligned. They just have to be done so over the extremely long term. But this idea of going, it drives me, it's like I want to build wealth. So my kids are proud of me and I show them what it's like to chase after something and be deeply committed to it and be passionate about it and love it and also make something that's better for other people. And if you do that automatically, you know, the family will prosper and everything else. So I think that's like, I think, I love. That was one of my favorite parts of, of your book.
- [119:35]
Brad Jacobs
Do you know, I think Amazon modified that, that mission statement now. Something with employee engagement too. Something about, something about workplace, great workplace environment or something like that. The best workplace environment in the world.
- [119:47]
David Senra
It is funny when you think about it because it's one. I have this conversation actually last night I went to dinner with our mutual friend Patrick o'. Shaughnessy. He texted me this morning, he's like, make sure you say tell Bradley that's like the best. Yeah, 100%. And we had, he was with us when we had breakfast here a few months ago and we were having this discussion at dinner with his family. I was like, what is the most impressive company built in our lifetime? And so me and him were born in the 80s. Because it's like, what about Microsoft? Microsoft is in 70s like it was before us. And I would say it's like for me the answer is like Amazon like started in 97. Like I can't think of another company starting in the 90s. Like in terms of like as impressive.
- [120:23]
Brad Jacobs
As what a big success story as.
- [120:25]
David Senra
What Jeff has built by reading your book, listening to your interviews, talking to you. Now you kind of, for me personally, like you kind of remove any self imposed limit that I have where I'm like, oh, like there's no. I don't think Brad has a limit to what he thinks he can achieve. He thinks on a big scale automatically. Like you just, you operate in a very big and ambitious way where I think a lot of people have like self. There's like self imposed ceilings that are most likely invisible in many cases. Right. If you want to build more wealth, you want to grow great companies, just find more customers to serve. Like it's pretty straightforward process. But I do think one of the things that I absolutely love is and it's the way I ended the episode, it's the way you ended the book. And I would summarize what I'm about to say here as go all in. You only get one shot at life. And I think this is a perfect spot to wrap our discussion. And so I'm just gonna read from your book to you and you said, the summer after 8th grade, I attended the Rhode Island Governor's School for the Gifted in Art and Music, a summer enrichment program for kids who've been nominated by their schools. I wasn't sure what to expect on the first night I was Captivated by a speech given by one of the leaders. I remember goosebumps rising on my arms as he spoke. This program is a special opportunity, but it's up to you to take advantage of it. You have a choice. You can waste the next couple of months and not accomplish that much, or you can go all in. This is an opportunity to go deep on a project and do the best work you've ever done. But you have to decide if you want it. I learned what it meant to go all in. The magical connection between intensity of focus and the end result. This is, to me, the punchline. I love this. If I put my whole heart and soul into a project, I had it in me to create really cool stuff. Can you talk about the passion and going all in and the advice that you'd have for other people listening to this?
- [122:13]
Brad Jacobs
I'm reliving the goosebumps, literally. But physically, I'm feeling the tingling of my sensation because that was a critical moment in my life where I understood that it's up to you. You can diddle daddle through life and just kind of sleepwalk and then die, or you can live life, you can embrace life. You can have big dreams and go all in and find your passion, which for most people is not going to be business or making money. But whatever it is, that's what it is and really achieve something fantastic. And for me, that's big motivator.
- [122:44]
David Senra
This is a perfect place to end. Thank you very much for writing the book. Thanks for taking the time. Brad, I really admire you. I've learned a lot from you and now I'm very humbled and privileged to call you a friend. I really appreciate it. Thank you very much.
- [122:55]
Brad Jacobs
All the best.
- [122:56]
David Senra
I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review. And make sure you listen to my other podcast founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs, searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through founders.